AM Best defines country risk (read the criteria procedure) as the risk that country-specific factors could adversely affect an insurer's ability to meet its financial obligations. Country risk is evaluated and factored into all AM Best ratings. As part of evaluating country risk, AM Best identifies the various factors within a country that may directly or indirectly affect an insurance company.
Countries are placed into one of five tiers, ranging from Country Risk Tier 1 (CRT-1), denoting a stable environment with the least amount of risk, to Country Risk Tier 5 (CRT-5) for countries that pose the most risk and, therefore, the greatest challenge to an insurer's financial stability, strength and performance.
AM Best's country risk evaluation does not impose a ceiling on ratings.
To better quantify investment risk, including the potential for market illiquidity and volatility; country specific risk charges are incorporated within AM Best's Universal BCAR Model. This enables the analytical team to increase the risk considered within an insurance company's invested assets which could diminish financial flexibility. Countries are categorized into one of five Country Investment Classes (CICs). Country Investment Class 1 (CIC-1) represents economies with relatively stable and liquid capital markets while CIC-5 represents markets with the least liquidity and highest volatility. It should be noted that while there are 5 CRTs and 5 CICs; there is not always a direct correlation between the two classifications. View the list of Best's Country Investment Classes.
AM Best incorporates transfer and convertibility risk into its holding company and debt ratings (read the criteria procedure). View the list of Best’s Transfer and Convertibility Ceilings.
Questions about AM Best's Country Risk Methodology may be directed to: firstname.lastname@example.org.
Guide to Best's Country Risk Tiers
Guide to Best’s Country Investment Classes
Select the Tier from the list below to narrow the view to include only those countries within the Tier.