OLDWICK, N.J.--(BUSINESS WIRE)--July 17, 2003--A.M. Best Co. has
released its revised debt rating methodology, which summarizes the
relationship between financial strength ratings, issuer credit ratings
and debt ratings that A.M. Best assigns to insurance organizations and
their financial obligations. It also focuses on how the use of debt
capital or other borrowings by insurance organizations can affect
their ratings.
With the growing interest by non-policyholders in insurer
creditworthiness, A.M. Best also is introducing an issuer credit
rating, which is an opinion as to the overall creditworthiness of an
insurer or insurance holding company from the perspective of its
senior-most creditors. The assignment of an issuer credit rating
serves as an integral transition from A.M. Best's traditional
financial strength ratings scale to the credit rating scale, which is
used in the capital markets.
The updated methodology also introduces revised notching
guidelines, which reflect A.M. Best's view that the insurance industry
requires wider notching between policyholder ratings and securities
issued by insurance holding companies than has been the convention in
the capital markets, particularly at the lower rating levels. This
view is supported by the one-year to 20-year cumulative default
probabilities constructed from A.M. Best's proprietary database, the
actual recoveries of impaired entities at the operating company level,
and the trend to greater regulatory intervention.
For more information on A.M. Best's rating methodology, or to
download a copy of this report, visit
www.ambest.com/ratings/index.html.
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.