JLT Re has today launched its first JLT Re Viewpoint Report – a detailed look at the changes and impact of the new A.M. Best Stochastic – based BCAR.
David Flandro, Global Head of Strategic Advisory, JLT Re, said, “There has been widespread interest regarding forthcoming stochastic-based enhancements to A.M. Best’s Capital Adequacy Ratio (BCAR) Model, since its announcement in early 2013. JLT Re has been closely involved with A.M. Best in the creation of the new stochastic BCAR, first as Towers Watson (TW) and most recently in collaboration with TW through the JLT Re-TW Alliance. JLT Re is therefore uniquely positioned among brokers to advise clients on the new model and to facilitate an understanding of the changes.”
A widening array of stakeholders has become focused on dynamic financial analysis, and A.M. Best’s new stochastic-based BCAR model will facilitate a more robust risk assessment in lockstep with this trend. This should benefit insurance and reinsurance buyers, shareholders, regulators and others who use A.M. Best’s analysis and ratings.
Ed Hochberg, Global Head of Analytics, Banking, and Advisory, JLT Re, said “Although balance sheet strength is the most important area of evaluation in the ratings process, a rating assignment also considers a carrier’s operating performance and business profile among other quantitative and qualitative measures.”
A.M. Best plans to publish a criterion paper in 2015 relating to the stochastic BCAR, allowing industry participants a 30-day period to comment on the proposed model.
David Flandro concludes, “While this is unlikely to have a material impact on the insurance sector as a whole, the new model could affect certain companies. As it is rolled out, JLT Re can help clients understand and develop their strategy in order to alleviate concerns, increase understanding and minimize any potential issues.”
The report will be available to JLT Re clients only until early 2015.
|
