Standard & Poor’s Ratings Services is asking for reactions to proposed changes in the way it evaluates insurers’ and reinsurers’ economic capital models.
S&P, New York, talks in the proposal about the conditions for deciding how credible an insurer’s economic capital model is, according to a summary of the proposal released by the agency’s Paris office.
Analyzing an insurer’s economic capital model is part of the process of analyzing its enterprise risk management program, S&P says.
S&P conducts ERM level I and level II reviews, the agency says.
“For insurers exhibiting complex risks and who have credible ECMs and a demonstrated ERM culture, we believe ECM reviews could yield information useful for our analysis,” the agency says. “We term this analysis the ‘ERM level III’ review.”