No new capital requirement for catastrophes at A.M. Best
Friday, 11 18 2016, Category: Insurance and Reinsurance, Country: World
Rating agency A.M. Best has changed a proposed update to its Best’s Capital Adequacy Ratio (BCAR) that would have seen catastrophe risk become a direct capital requirement and has also reduced the emphasis on catastrophe tail risks in the capital adequacy calculation.
A.M. Best published a draft update to its BCAR methodology earlier this year, which proposed making catastrophe risks held on the balance-sheet more of a focus for insurance and reinsurance company capital adequacy calculations.
A.M. Best’s BCAR is used to assess the strength of an insurance or reinsurance balance sheet, and is part of the overall methodology the firm uses to assign ratings to re/insurance companies.