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TMCNet:  Fitch launches Prism Factor-Based Capital Model for EMEA insurers [CPI Financial]

[September 04, 2014]

Fitch launches Prism Factor-Based Capital Model for EMEA insurers [CPI Financial]

(CPI Financial Via Acquire Media NewsEdge) Fitch Ratings has launched its Prism Factor-Based Capital Model (Prism FBM), the agency's risk-based model for assessing the capital strength of insurance companies in EMEA. The model enables Fitch to bring insurers writing business in different regions under varying accounting standards into a single framework and to develop a comparable capital score for use in the rating process.


Following largely positive feedback from the market on the draft model published in October 2013, Fitch has maintained Prism FBM as a simple, Excel spreadsheet-based model in preference to building a more complex, computationally intensive model. Capital analysis of insurance companies encompasses various viewpoints and is not solely reliant on any particular measure or model. Fitch's assessment of capital strength does not in itself establish a rating. Prism FBM is designed to be used as an enhanced analytical tool, not to optimise capital or to make business decisions.

Prism FBM is termed 'factor based' because capital adequacy is calculated based on risk charges applied to exposure values, as opposed to being calculated by a stochastic process. The model's sole purpose is to support Fitch's rating analysis, and it is therefore designed to reflect the agency's own views on risk.

Prism FBM, a user guide and the model definition document, are freely available to download for registered users on the website at www.fitchratings.com/prismfbm.

(c) 2014 CPI Financial. All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

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