In May 2020, A.M. Best announced details of its COVID-19 stress test. The assumptions for its stress test are as follows:
• A 35 percent loss on equities, Schedule BA assets and real estate
• A one notch downgrade of the fixed income portfolio
• A 5 percent loss ratio stress for most commercial lines.
The stress test results showed strong capitalization and a Best’s Capital Adequacy Ratio (BCAR) decline of less than 10 percent. The results also showed certain outsized impacts due to risky assets or a concentration in certain lines, and the continued monitoring of claims impact, capital management and contract language interpretation.
Median BCAR Score
Source: A.M. Best Special Report: Mid-Year Rating Changes Mixed as P&C Insurers Manage Challenging Market Dynamics, September 28, 2020