Announcements Criteria

GCR Requests Public Comment on Draft Criteria for Rating Insurance Companies

Johannesburg, 29 March 2019: GCR has published a draft criteria for rating insurance companies.

The following criteria is open to public comment until the 30th April 2019.

Request for Comment: Criteria for Rating Insurance Companies.

The draft criteria includes a summary of how it fits into the overarching GCR Ratings Framework, details of which were released on 12 March 2019 in an announcement titled “GCR Requests Public Comment on Draft Ratings Framework Criteria and Draft Ratings Definitions” (please click here for further details). The criteria includes a proposed scope and summary of key changes, together with a breakdown of how each of the components is to be assessed and scored.

The new Criteria for Rating Insurance Companies has rolled the previous six insurance criteria into one, with appendices attending to additional considerations for specific business or risk types. As a result, GCR will be retiring the following:

  • Global Master Criteria for Rating Long Term Insurance Companies, updated May 2018
  • Criteria for Rating Newly Established and Start-Up Insurance Companies, updated May 2018
  • Criteria for Rating Insurers’ Debt and Hybrid Equity Instruments, updated May 2018
  • Criteria for Rating Cell Captive Insurers, updated May 2018
  • Criteria for Rating South African Medical Schemes, updated May 2018

Entities previously rated under these retiring criteria shall be assessed under the ‘Draft Criteria for Rating Insurance Companies’, if the criteria is adopted.

GCR will accord “Financial Strength” ratings to all insurers going forward, replacing the term “Claims paying ability” previously applied to short term insurers. Nevertheless, financial strength ratings are an equivalent assessment of an insurer’s capacity to honour obligations to policyholders (i.e. the Financial Strength rating is a change in nomenclature only, and is not a change in the basis or outcome of the analysis).

The draft criteria retains much of the fundamentals utilised in the previous GCR methodologies. Of significance is the draft criteria’s alignment to the broader GCR Ratings Framework. Furthermore, a more consistent approach to rating debt instruments has been adopted, which replaces the previous insurance-specific Criteria for Rating Insurers’ Debt and Hybrid Equity Instruments, updated May 2018.

GCR anticipates a moderate to moderately high impact on the ratings of rated insurance entities, if the proposed draft criteria is adopted.

GCR invites comment on the draft criteria presented above and welcomes comments which may be sent to rfc@GCRratings.com, prior to the closing of the comment period on the 30th of April 2019. GCR will continue to support all ratings on existing methodologies until such time as the final criteria are adopted.

Analytical Contacts

Yvonne Mujuru Marc Chadwick

Sector Head: Insurance Ratings Chief Ratings Officer

+27 11 784 1771 +27 11 784 1771

https://globalratings.net/uploads/files/GCR_RFC_Criteria_for_Rating_Insurance_Companies.pdf

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