GCR publishes Insurance Criteria FAQ for Applying Regulatory Insulation to Financial Strength Ratings
Johannesburg, 27th November 2019 – GCR Ratings (“GCR”) has published a FAQ providing clarification on the Criteria for Rating Insurance Companies, May 2019.
GCR may occasionally provide clarifications to credit ratings issued within specific markets or jurisdictions in order to reflect any divergent or market related nuances, which have the potential to detract from the comparability of GCR credit ratings across jurisdictions within which GCR provides credit rating services. This FAQ clarifies the application of regulatory insulation to Financial Strength Ratings (“FSR”) and can be found at GCRratings.com/criteria.
GCR has introduced a FAQ on the Criteria for Rating Insurance Companies to provide greater clarity regarding the approach to regulatory insulation for FSR ratings. In essence, the criteria allows GCR to provide greater levels of regulatory insulation for the FSR ratings of insurance companies. As a result, the below criteria can be used to guide the application of the insulation criteria found on page 23 of the Criteria for the GCR Ratings Framework. We will seek to apply the relevant sections under the GCR Ratings Framework, however should the operating environment of the parent be significantly lower than that of the subsidiary this FAQ may be used as an analytical guide.
This FAQ exclusively refers only to the financial strength ratings of well-regulated life and non-life insurance companies. Typically, these companies will be wholly or majority owned subsidiaries, operating in relatively stronger country risk jurisdictions, which have stronger credit fundamentals than their cross-border parents.
The FAQ does not apply to issuer or issue credit ratings for the same rated entities.
CREDIT RATINGS ISSUED AND RESEARCH PUBLICATIONS PUBLISHED BY GCR, ARE GCR’S OPINIONS, AS AT THE DATE OF ISSUE OR PUBLICATION THEREOF, OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. GCR DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL AND/OR FINANCIAL OBLIGATIONS AS THEY BECOME DUE. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: FRAUD, MARKET LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND GCR’S OPINIONS INCLUDED IN GCR’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND GCR’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND GCR’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL OR HOLD PARTICULAR SECURITIES. NEITHER GCR’S CREDIT RATINGS, NOR ITS PUBLICATIONS, COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. GCR ISSUES ITS CREDIT RATINGS AND PUBLISHES GCR’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING OR SALE.