A.M. Best Methodology: Catastrophe Risk Management Incorporated Within the Rating Analysis.OLDWICK, N.J. -- A.M. Best Co. has published "Catastrophe Risk Management Incorporated Within the Rating Analysis," which outlines the criteria A.M. Best looks for when determining whether or not a company has strong catastrophe risk management. Last month, A.M. Best hosted a conference call on the recent modifications it made to its catastrophe stress test. During the discussion, A.M. Best said that overall catastrophe management through underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. , loss mitigation, exposure management and reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. or retrocessional reinsurance is critical to any company with significant catastrophe exposure within its operating market. A.M. Best's confidence in a company's catastrophe exposure management, along with its ability to replenish re·plen·ish v. re·plen·ished, re·plen·ish·ing, re·plen·ish·es v.tr. 1. To fill or make complete again; add a new stock or supply to: replenish the larder. 2. any lost capital following a catastrophe, play a major role in the final view of a company's capital needs and A.M. Best's willingness to reduce its stressed capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. . Catastrophe risk management is evaluated relative to these criteria and considered along with the financial flexibility of a company to determine its ability to first, avoid a material loss to capital, and second, to respond to any significant capital deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. from such an event. For more information on A.M. Best's rating Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. methodologies or to download a copy of this methodology report, visit http://www.ambest.com/ratings/methodology.asp. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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