Revised Criteria Procedure Announced for 'Best's National Scale Ratings' by AM Best
AM Best Expands National Scale Ratings Coverage to Algeria, Brazil, and Thailand
In a significant move, global credit rating agency AM Best has announced revised criteria for its "Best's National Scale Ratings" (NSR), effective immediately. This update introduces coverage for insurance companies in Algeria, Brazil, and Thailand, expanding NSR coverage to nine countries.
The updated NSR criteria procedure includes an updated framework and a more refined measure of the financial strength of insurers and reinsurers domiciled within the same country. This enhancement allows for finer differentiation between participants in their respective insurance markets.
The key details of the revised criteria procedure are as follows:
- The NSR methodology should be used in conjunction with AM Best's broader Credit Rating Methodology and related procedures.
- National scale ratings are derived by assessing the creditworthiness of insurance companies relative to their country peers, incorporating public data and financial reports.
- AM Best analyses nine individual financial factors across insurers in each country, calculated as industry averages over three years. These factors include Reported Capital and Surplus, Ratio of Cash & Fixed Income Investments to Total Investments, Gross Leverage Ratio, Reported Gross Premiums Written, Return on Equity, Return on Assets, Retention Ratio, Combined Ratio, and Reported Assets.
- Each insurer's metrics are compared to country averages to derive a country-specific financial strength distribution. Other financial indicators may be incorporated depending on local financial reporting standards.
- The updated criteria also clarify conditions for assigning NSRs, their relation to AM Best's global issuer credit ratings, and how country risk influences NSRs.
It is important to note that the revisions to the NSR criteria procedure will not result in a change to any currently published Best's Credit Ratings.
AM Best is a leading credit rating agency, news publisher, and data analytics provider specializing in the insurance industry. The agency does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore, and Mexico City.
For further information, contact:
- Christopher Sharkey, Associate Director of Public Relations at AM Best, 1 908 882 2310, [email protected]
- Al Slavin, Senior Public Relations Specialist at AM Best, 1 908 882 2318, [email protected]
- Ann Modica, Director of Credit Rating Criteria in the Research and Analytics department at AM Best, 1 908 882 2127, [email protected]
- Robert Raber, Senior Director of Credit Rating Criteria in the Research and Analytics department at AM Best, 1 908 882 2261, [email protected]
This press release can be sent via email through Business Wire's platform.
To denote the difference between a global Issuer Credit Rating (ICR) and Best's NSR, the NSR has an ".XX" with the XX representing a two-letter country code. For example, a Best's NSR for a Brazilian insurer would be denoted as "B++.BR".
[Sources: 3, 4, 5] [Author: Business Wire]
In this updated Best's National Scale Ratings (NSR) criteria procedure, a more refined measure of the financial strength of insurance companies in clouded (unspecified) industries is assessed, which allows finer differentiation between business competitors in their respective markets. This refinement encompasses the analysis of cloud-based (unspecified) financial factors, such as Reported Capital and Surplus, Cash & Fixed Income Investments to Total Investments, Gross Leverage Ratio, and others, to obtain country-specific financial strength distributions.
