AM Best Publishes Response to Comments on Application of Best’s Credit Rating Methodology to IFRS 17-Reporting Companies

AM Best has published its response to comments received from market participants in the insurance industry and other interested parties on the application of Best’s Credit Rating Methodology (BCRM) and related criteria procedures to IFRS 17-reporting companies. The related criteria procedures are “Available Capital and Insurance Holding Company Analysis,” “Understanding Global BCAR,” “Understanding BCAR for Canadian Property/Casualty Insurers” and “Understanding BCAR for US and Canadian Life/Health Insurers.”

AM Best launched a request for comment on the application of BCRM to IFRS 17-reporting companies on Feb. 26, 2024, with the comment period closing on March 27, 2024.

AM Best received eight comments during the public consultation period through the methodology in-box. AM Best would like to thank all the respondents who participated in the consultation period. A "Response to Comment” document that addresses key themes and questions is published here: https://web.ambest.com/rating-methodologies/comments.

BCRM, associated criteria procedures and Best’s Capital Adequacy Ratio (BCAR) focus on the underlying economics of (re)insurers and are not specific to accounting standards, nor are key rating assumptions, variables and drivers in BCRM and related criteria procedures. This approach ensures global consistency and comparability across AM Best’s credit ratings and does not change upon the introduction of IFRS 17. However, clarifications related to IFRS 17 have been provided, as referenced in a Best’s Commentary from Jan. 4, 2024, titled “Frequently Asked Questions: IFRS 17” on page 3 under the methodology heading.

After considering comments received, AM Best is not making changes to BCRM and associated criteria procedures for IFRS 17. AM Best notes that its methodology and criteria procedures evolve over time as improvements are identified and as changes become desirable to reflect developments in the underlying operations of insurers.

BCRM and associated criteria procedures are available at http://www.ambest.com/ratings/methodology.asp.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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