Posts Tagged ‘A.M. Best’
In Figure 1, RBC Ratio is defined as the ratio of aggregate Total Adjusted Capital to Authorized Control Level RBC for each of 111 combined insurance groups. Plotted against BCAR, there is clearly a strong correlation between the measures, though the relationship is not perfect.
Micah Woolstenhulme, Senior Vice President
This post is Part II of an earlier post that reviewed a session held at the Casualty Actuarial Society Annual Meeting. In that session, attendees hypothetically viewed the P&C industry as a single large company. Audience members were shareholders and session panelists adopted various executive and leadership roles in the company. The meeting’s task was to vet an economic capital model before the board of directors, allowing individual shareholders the freedom to openly question the model’s input and results. This model, if properly developed and embedded into the company’s strategic management, would represent a key component of the Own Risk and Solvency Assessment (ORSA) Summary Report that will be required of large companies in the industry as early as 2015. Along the way, the presentation and board discussion were interrupted to poll the audience members on several interesting questions.
Micah Woolstenhulme, Senior Vice President
At the 2012 Casualty Actuarial Society (CAS) Annual Meeting in Orlando, Florida, the general session, “Economic Capital Modeling for ORSA in the U.S. Property and Casualty (P&C) Industry: The Stakeholders Convene,” afforded participants a novel opportunity to satisfy their continuing education credits. In that session, attendees hypothetically viewed the P&C industry as a single large company. Audience members were shareholders and session panelists adopted various executive and leadership roles in the company.
The Market ratings remain the principal measure of financial strength to be applied to operations underwriting at Lloyd’s, but several rating agencies separately provide syndicate-specific analysis. These analyses can support the reinsurance-buying decision-making process, but it is dangerous to rely on them without understanding the varying underlying methodologies. (None of these products are endorsed by Lloyd’s.)
The financial strength ratings assigned to Lloyd’s by S&P, A.M. Best and Fitch have been relatively stable in the 15 years since the first rating was assigned. During this period, the (re)insurance industry and Lloyd’s itself have undergone dramatic change as they responded to the major challenges of the September 11, 2001, terrorist attacks, devastating US and Gulf of Mexico hurricanes and other natural catastrophes that occurred across the globe. The softening casualty insurance market and the global financial crisis also caused difficulties during this time. The current Lloyd’s ratings assigned by each rating agency are at their original levels - a significant achievement given that most of Lloyd’s peers have failed to recover their pre-2001 ratings.
Here we present the top stories on enterprise risk management that appeared in GC Capital Ideas in the first six months of 2011.
Marsh and RIMS Survey: Excellence in Risk Management VIII: According to Excellence in Risk Management VIII: Greater Expectations, Greater Opportunities, a new survey conducted by Marsh and the Risk and Insurance Management Society (RIMS), executives in the C-suite expect risk managers to step up and take a more active role in integrating enterprise-wide risk management with their organizations’ broader strategic goals.
Guy Carpenter Wins Enterprise Risk Management Award: Guy Carpenter & Company has won an award for its thought leadership and innovative research in enterprise risk management (ERM) from the Joint Risk Management Section of the Casualty Actuarial Society, Canadian Institute of Actuaries and Society of Actuaries. Working with research firm Risk Lighthouse LLC, Guy Carpenter accepted the 2011 Award for Practical Risk Management Applications at the 2011 ERM Symposium, held March 14-16 in Chicago.
Succeeding Under Solvency II: Pillar One, Capital Requirements; Part I: Despite its nominally European focus, Solvency II presents a wide range of considerations - and opportunities - to insurance entities worldwide. This new regulatory framework will enact a fundamental change in the way the European insurance industry looks at risk and risk management practices, as it will force the convergence of all aspects of risk quantification with those of business decision making. All businesses that have operations, subsidiaries or affiliates in Europe, write coverage in Europe or do business with insurers in Europe should be preparing now for these wide-ranging changes.
Navigating the A.M. Best Supplemental Rating Questionnaire Changes: Recent changes related to the A.M. Best Supplemental Rating Questionnaire (SRQ) will have a sweeping impact on U.S. property and casualty insurers. Respondents are facing new questions regarding enterprise risk management (ERM), new considerations for workers compensation coverage, and the release of the new version 11 of the RMS RiskLinkTM model, all of which will factor into a company’s A.M. Best rating.
During a recent webinar, a panel convened by A.M. Best reviewed catastrophe models and addressed questions that arose as a result of the new RMS and AIR model versions that have been released. The discussion was focused on how A.M. Best wants companies to demonstrate a solid understanding of their catastrophe risk exposure and where it fits within their risk tolerances. The panel outlined the need for rated companies to engage in ongoing discussions with their A.M Best analysts regarding the efficacy of model output, specifically, the companies’ confidence in the model output and the reasoning behind this view.
Recent changes related to the A.M. Best Supplemental Rating Questionnaire (SRQ) will have a sweeping impact on U.S. property and casualty insurers. Respondents are facing new questions regarding enterprise risk management (ERM), new considerations for workers compensation coverage, and the release of the new version 11 of the RMS RiskLinkTM model, all of which will factor into a company’s A.M. Best rating.