قالب وردپرس درنا توس
Home / Insurance / Triple-I blog | Insurers, regulators are pushing back on changes in S&P rating criteria

Triple-I blog | Insurers, regulators are pushing back on changes in S&P rating criteria



Insurers, regulators and members of Congress have expressed concern about proposed changes to how Standard & Poor’s Global Ratings defines “available capital” in its rating criteria. Specifically, S&P would no longer consider certain debt to be available for the purpose of assessing insurers’ financial strength and ability to pay receivables.

“Disruptive”

; and an “overuse of market power” is how the Association of Bermuda Insurers and Reinsurers (ABIR) described the measure in an 18-page letter to S&P, which has requested comments by April 29 on its proposed methodology and assumptions for analyzing it. risk-based capital adequacy for insurers and reinsurers.

The details of the proposed changes are a little too technical to explain in a blog post, but the bottom line is that it would equate to the sudden removal of billions of dollars overnight that would otherwise be available to guarantee disaster risk – a sector where the average Insured losses have increased by almost 700 percent since the 1980s.

“This debt is seen as capital by the regulators,” said ABIR CEO John Huff in a press release. “If carriers are forced to restructure debt, they will receive less favorable terms today. All claims will increase the financial leverage, which is contrary to the stability people seek from a credit rating agency.”

Members of the U.S. House of Representatives and Senate, along with the U.S. State Insurance Supervisors, have expressed similar concerns through the National Association of Insurance Commissioners about S & P’s proposed change to its rating criteria.

ABIR points out ambiguities at the time of the expansion of the planned changes and says: “Insurers and reinsurers will not have time to respond to the new debt treatment until S&P has indicated that the changes will take effect.”

“There is no slide or grandfather,” says Huff. “It’s just a cliff. “

Bermuda’s insurance company urges the credit rating agency to provide a transition period for all such changes, as well as for debt that is already in place.

“If there is a transition plan, we can work within it,” says Huff. “But having this so abrupt is quite disruptive. Standard & Poor’s should add stability, not cause disruption.”


Source link