Request for comments - update of the Methodology for rating of the insurance companies to pay claims
BCRA invites all stakeholders to submit their comments on the exposed in the current document "Methodology for Rating of the Ability of Insurance Companies to Pay Claims" to e-mail: email@example.com until June 2, 2018.
The purpose of the change is to reflect the specificities of companies that are subject to effective regulatory regime such as Solvency II (DIRECTIVE 2009/138/EC) or other equivalent regulatory regimes. In addition, some terminological clarifications and modifications are made, while maintaining the main rating factors observed so far, aiming to achieve consistency and comparability of the results.
1. Along with the other key functions, the availability of an effective risk management system will be seen as a basis for company's strategic management and as an important quality factor affecting the quantitative aspects of the company's rating.
2. The portfolio diversification/concentration of the insurance company will be considered depending on the particular insurance types, the presence of specific competencies and the know-how of the insurer.
3. When considering the insurers' investment portfolios, the different aspects of the "Prudent Investor Principle" will be taken into account as well as the existence or absence of regulatory constraints on the investments type and size.
4. The current "Financial Leverage" indicator changes its name to "Insurance Leverage" and the indicator "Financial Leverage" will now express the ratio of long-term liabilities, other than insurance reserves, to the amount of insurer's equity.
5. The ratio of Net Premium Earned to equity will not be called "operational leverage" but will be written as a description.
6. When assessing the capital adequacy, BCRA will address the requirements and the ratios defined by the law / regulator. For insurers subject to the Solvency II regime, the eligible own funds coverage of the Solvency Capital Requirement (SCR) and the Minimum Capital Requirement (MCR) will be considered, as well as the ratios between the separate SCR's elements and the excess of the assets over the liabilities.
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