A.M. Best Co. has launched “Best’s Structured Finance Center,” which it describes as a “web Portal where visitors can view the rating agency’s activities in the insurance-linked securities market and other transactions/methodologies related to the convergence of capital markets and insurance.”
The bulletin notes that in addition to its insurance company ratings, Best also “rates and evaluates insurance-linked capital markets transactions.” These include: catastrophe bonds, CDO’s (collateralized debt obligations) of catastrophe risks, sidecars (and their debt), contingent capital solutions, disability reserve securitizations, closed block transactions, life settlements securitizations, reinsurance recoverable hedging transactions, protected cell structures, and other insurance-linked transactions.
Best indicated that the “Structured Finance Group also provides valuable input to the financial strength rating process, since nearly all the insurance-linked transactions are designed to be reinsurance substitutes. For example, the group evaluates the basis risk and tail risk associated with certain transactions and passes the information on to insurance-company rating analysts.
“Best’s Structured Finance Center aggregates information including structured-finance-related ratings, press releases, news stories and documents that detail the methodologies employed by the company’s analysts.”
Source: A.M. Best
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