In order to address the continuing development and expanding growth of the captive market, A.M. Best has published rating methodology specific to single-parent captive insurance companies.
A.M. Best’s analysts evaluate a single-parent captive in a manner similar to that used with a commercial insurance company but with consideration given to the financial risk of the parent. A.M. Best applies its own risk-evaluation process to the parent and its relationship to its captive. The same analytical team that evaluates the financial strength of the captive handles the analysis of the parent company.
A.M. Best’s analysis of the parent company primarily focuses on three areas: capitalization (quantity and quality), financial flexibility and ownership structure. A.M. Best assesses how the parent company’s risk ultimately may affect the captive on a case-by-case basis.
In addition, A.M. Best evaluates the parent’s long-term commitment to the captive; that is, its willingness to provide capital when needed.
For more information, visit A.M. Best’s Web site at www.ambest.com.
Topics AM Best
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