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AM BestTV: Strong Solvency II Ratios Typically Mirrored by Strong BCAR Ratios, Says AM Best Director
[August 22, 2019]

AM BestTV: Strong Solvency II Ratios Typically Mirrored by Strong BCAR Ratios, Says AM Best Director


In this AMBestTV episode, Timothy Prince, director of analytics, AM Best, said Solvency II ratios typically focus on one-year projections, while Best's Capital Adequacy Ratio (BCAR) considers a longer time horizon. Click on http://www.ambest.com/v.asp?v=ratios819 to view the entire program.

Prince discussed a new Best's Special Report that compared the output from the two models, focusing on AM Best-rated European insurers. The report notes there has been only limited opportunity to observe trends as it is relatively early in the application of Solvency II and AM Best's updated BCAR model, with only two years of data available. Still, Prince highlighted the similarities and differences between the two models.

"Looking at year-end 2017, AM Best's research showed that broadly speaking, companies with stronger Solvency II ratios also typically have stronger BCAR ratios. There were very few companies where that was not true," said Prince. "As for the differences, since these are two different data sources, under Solvency II, companies file specific regulatory returns, while under the BCAR model, AM Best uses a company's IFRS or GAAP financial statement. Within the two independent models, there are also differences in definitions of how things are classified and that might influence which risk bucket a company would fall under within each model."

To access a copy of this special report, titled, "AM Best Compares BCAR Model Output With Solvency II Capital Requirements," visit http://www3.ambest.com/bestweek/purchase.asp?record_code=28835.



Recent AMBestTV episodes:

  • NAIC's NYC Event Draws Insurance Industry to a Meeting of the Minds: At the National Association of Insurance Commissioners' Summer Meeting, insurance regulators and industry participants say the meetings provide a forum to clarify important insurance issues: http://www.ambest.com/v.asp?v=naic1819.
  • Captive Insurance Leaders Say the Sector Provides a Sense of Purpose: Attendees at the Vermont Captive Insurance Association conference said supporting the captive sector helps policyholders, members and the larger society: http://www.ambest.com/v.asp?v=vcia4919.
  • Born as Innovations, Captives Find New Ways to Provide Coverage, Services: A panel of industry executives join AM Best Managing Director John Andre in discussing the rating agency's approach to insurance innovation and how captive insurers are finding their own ways to innovate: http://www.ambest.com/v.asp?v=innovationpanel819.
  • As Insurance Market Hardens, Captive Sector Poised for Growth: Rising insurance prices for property, trucking and other lines are spurring organizations to explore ways to cover their own risk or better manage deductibles: http://www.ambest.com/v.asp?v=vcia1819.

AMBestTV covers exclusive AM Best and insurance industry information and reports, targeted topics and key developments in the insurance, reinsurance and related sectors daily. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html. View AMBestTV episodes at http://www.ambest.tv.


AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2019 by A.M. Best Company, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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