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Best's Credit Rating Methodology (BCRM)

The rating process used to develop a Best's Credit Rating opinion represents a comprehensive analysis consisting of a quantitative and qualitative evaluation of balance sheet strength, operating performance and business profile or, where appropriate, the specific nature and details of a security. The analysis may include comparisons to peers, industry standards and proprietary benchmarks as well as assessments of operating plans, philosophy, management, risk appetite and the implicit or explicit support of a parent or affiliate. The analysis is completed considering applicable BCRM criteria procedures or models.

A.M. Best's Credit Rating Methodology (BCRM) is divided into two parts: 1) the Introduction which contains a description of the rating process, information requirements, an overview of the credit rating evaluation, assumptions & economic factors, and key quantitative and qualitative rating factors and 2) the Insurance Criteria Procedure Reports which describe the criteria employed. The Introduction and Insurance Criteria Procedure Reports are listed as separate pdf documents below. In addition, the entire BCRM is available as one pdf document. (Select Complete BCRM).

Call for Public Comment

The following BCRM criteria procedure reports are marked as "Draft" and are in a public comment period. Market participants and other interested parties are invited to provide formal comments regarding draft BCRM criteria procedures wherever posted. In addition, formal comments may be submitted at any time on any other existing (i.e. published in-use) BCRM criteria procedure report listed below.

Formal Comments should be emailed to rating.methodology@ambest.com. Please indicate in your formal BCRM criteria procedure comment submission if the comments provided should be kept confidential. Any formal BCRM criteria procedure comments received that do not indicate a request for confidential treatment will be published in the results of consultation section of this website. (results of consultation).

Best's Credit Rating Methodology
Global Life & Non-Life Insurance Edition
Last Revised: June 15, 2015

I. Introduction
 
II. Insurance Criteria Reports
A. Universal Criteria Reports
  • A.M. Best Ratings On a National Scale Sep. 05, 2014
  • Risk Management and the Rating Process for Insurance Companies Apr. 02, 2013
  • Rating Members of Insurance Groups Dec. 15, 2014
  • Equity Credit for Hybrid Securities Apr. 02, 2014
  • Understanding Universal BCAR May 06, 2015
  • Measuring Transfer and Convertibility Risk May 02, 2012
  • Insurance Holding Company and Debt Ratings May 06, 2014
  • Evaluating Country Risk May 02, 2012
  • A.M. Best's Perspective on Operating Leverage Jan. 17, 2012
  • Analyzing Contingent Capital Facilities Feb. 23, 2012
  • Analyzing Insurance Holding Company Liquidity Mar. 25, 2013
  • Evaluating Non-Insurance Ultimate Parents Feb. 24, 2012
  • Catastrophe Analysis in A.M. Best Ratings Nov. 03, 2011
  • Evaluating U.S. Surplus Notes Apr. 02, 2014
  • B. Life/Health Criteria Reports
  • Understanding BCAR for U.S. and Canadian Life/Health Insurers Apr. 22, 2015
  • A.M. Best's Liquidity Model for U.S. Life Insurers Aug. 01, 2013
  • Rating Funding Agreement-Backed Securities Nov. 02, 2011
  • C. Property/Casualty Criteria Reports
  • Understanding BCAR for Property/Casualty Insurers Apr. 15, 2015
  • Understanding BCAR for Canadian Property/Casualty Insurers Jun. 02, 2015
  • The Treatment of Terrorism Risk in the Rating Evaluation Mar. 17, 2015
  • D. Specialty Insurers Criteria Reports
  • Rating New Company Formations Jun. 06, 2011
  • Alternative Risk Transfer (ART) Dec. 27, 2011
  • Rating Surety Companies Aug. 13, 2014
  • Rating Run-Off Insurers and Specialists Mar. 25, 2013
  • Analyzing Perpetual Insurers Aug. 01, 2013
  • Rating Protected Cell Companies Mar. 01, 2012
  • Takaful (Shari'a Compliant) Insurance Companies Jan. 10, 2012
  • BCAR For Title Insurance Companies Apr. 02, 2014
  • Rating Title Insurance Companies Mar. 02, 2012
  • Rating Lloyd's Syndicates Feb. 07, 2011
  • Rating Monoline Financial Guarantors in the Public Finance Sector Apr. 08, 2013
  • Rating Reinsurance Pools Aug. 02, 2013
  • Rating Reinsurance/Insurance Transformer Vehicles Sep. 19, 2014
  • E. Insurance-Linked Securities Criteria Reports
  • Insurance-Linked Fund Ratings Dec. 12, 2014
  • Securitization of Annuities Apr. 05, 2012
  • Rating Surplus Note And Insurance Trust-Preferred CDOs Feb. 23, 2012
  • Assessing the "Tail Risk" of Sidecars Aug. 23, 2012
  • Rating Natural Catastrophe Bonds Aug. 23, 2012
  • Rating Sidecars Jan. 17, 2012
  • Rating Life-Related Premium Financing Loan Securitizations May 02, 2012
  • Rating Closed-Block Monetizations Sep. 29, 2011
  • Life Settlement Securitization Feb. 21, 2014
  • Securitization of Period-Certain and Life-Contingent Structured Settlements Sep. 29, 2011
  • Best's Idealized Default Matrix Dec. 05, 2007
  • Securitization of Reinsurance Recoverables Jun. 16, 2011
  • Gauging the Basis Risk of Catastrophe Bonds Aug. 23, 2012