JLT Re has launched its first JLT Re Viewpoint Report—a detailed look at the changes and impact of the new A.M. Best Stochastic–based Best’s Capital Adequacy Ratio (BCAR).
David Flandro, global head of strategic advisory at JLT Re, said: “There has been widespread interest regarding forthcoming stochastic-based enhancements to [the BCAR] model, since its announcement in early 2013.”
“JLT Re has been closely involved with A.M. Best in the creation of the new stochastic BCAR, first as Towers Watson (TW) and most recently in collaboration with TW through the JLT Re-TW Alliance.”
Ed Hochberg, global head of analytics, banking, and advisory at JLT Re, commented: “Although balance sheet strength is the most important area of evaluation in the ratings process, a rating assignment also considers a carrier’s operating performance and business profile among other quantitative and qualitative measures.”
A.M. Best plans to publish a criterion paper in 2015 relating to the stochastic BCAR, allowing industry participants a 30-day period to comment on the proposed model.
Flandro added: “While this is unlikely to have a material impact on the insurance sector as a whole, the new model could affect certain companies.”
“As it is rolled out, JLT Re can help clients understand and develop their strategy in order to alleviate concerns, increase understanding and minimise any potential issues.”
