A.M. Best Releases Updated Draft of Best’s Credit Rating Methodology, Revised Best’s Capital Adequacy Ratio Criteria



A.M. Best has released updated drafts of Best’s Credit Rating Methodology (BCRM) and the criteria procedure for the U.S. property/casualty (P/C) Best’s Capital Adequacy Ratio (BCAR). A.M. Best has also simultaneously released proposed revisions to the criteria procedures for the U.S. and Canadian Life/Health and Universal BCAR.

A.M. Best is requesting comment from interested parties on these draft documents, which are available in the methodology section of A.M. Best’s website, by no later than March 1, 2017. Written comments should be submitted by e-mail to

The BCRM is a reorganization of the current methodology, utilizing a building block approach to provide greater detail, clarity and transparency to the rating analysis. The BCRM offers a forum for discussion with analytical staff and also will provide greater consistency in the rating process. While the methodology is being updated, the core components of the analytical process — a review of balance sheet strength, operating performance, business profile and enterprise risk management — remain as the key pillars and thus do not represent a fundamental change to the rating analysis.

The three proposed BCAR criteria procedure updates apply to:

U.S. property/casualty companies;

U.S. and Canadian life/ health companies;

Insurance companies domiciled outside of the U.S. or Canada.

All companies that are evaluated using the BCAR model governed by these criteria procedures will receive their new BCAR output. Company management is encouraged to review their BCAR output, when received, in conjunction with the criteria procedure and the BCRM. A.M. Best expects to begin distributing the model output in the coming weeks.

Please see the Nov. 14, 2016, Best’s Briefing titled “Criteria Update: BCRM and BCAR” for a discussion of the most significant changes to the BCRM and U.S. P/C BCAR criteria procedure since the March 10, 2016, initial call for comment. The changes noted in the briefing incorporate A.M. Best’s review of industry feedback received. To access the full copy of this briefing, please visit .

For a more detailed video discussion on this subject with Matthew Mosher, executive vice president and chief operating officer of A.M. Best Rating Services, Inc., please visit .

A.M. Best is planning a series of webinars for early December to discuss the proposed revisions to its BCRM and U.S. P/C BCAR, as well as those to its criteria procedures for the U.S. and Canadian Life/Health and Universal BCAR.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source.

European Union Disclosures
A.M. Best – Europe Rating Services Limited (AMBERS), a subsidiary of A.M. Best Rating Services, Inc., is an External Credit Assessment Institution (ECAI) in the European Union (EU). Therefore, credit ratings issued and endorsed by AMBERS may be used for regulatory purposes in the EU as per Directive 2006/48/EC.

Australian Disclosures
A.M. Best Asia-Pacific Limited (AMBAP), Australian Registered Body Number (ARBN No.150375287), is a limited liability company incorporated and domiciled in Hong Kong. AMBAP is a wholesale Australian Financial Services (AFS) Licence holder (AFS No. 411055) under the Corporations Act 2001. Credit ratings emanating from AMBAP are not intended for and must not be distributed to any person in Australia other than a wholesale client as defined in Chapter 7 of the Corporations Act. AMBAP does not authorize its Credit Ratings to be disseminated by a third-party in a manner that could reasonably be regarded as being intended to influence a retail client in making a decision in relation to a particular product or class of financial product. AMBAP Credit Ratings are intended for wholesale clients only, as defined.

Credit Ratings determined and disseminated by AMBAP are the opinion of AMBAP only and not any specific credit analyst. AMBAP Credit Ratings are statements of opinion and not statements of fact. They are not recommendations to buy, hold or sell any securities or any other form of financial product, including insurance policies and are not a recommendation to be used to make investment /purchasing decisions.

Important Notice: A.M. Best’s Credit Ratings are independent and objective opinions, not statements of fact. A.M. Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. A.M. Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. For additional information regarding the use and limitations of credit rating opinions, as well as the rating process, information requirements and other rating related terms and definitions, please view Understanding Best’s Credit Ratings.

A.M. Best receives compensation for rating related services provided to organizations that it rates. A.M. Best does not offer consulting or advisory services.

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