RAM Ratings updates criteria and methodology for insurance and takaful companies

Published on 19 Sep 2016.

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RAM Ratings has released an update on the criteria and methodology for insurance and takaful companies. The publication is a master compilation of previously released criteria papers and incorporates updates arising from industry, regulatory and accounting developments in recent years. The rating methodology applies to insurance and takaful companies, captive insurers, reinsurers and financial guarantee insurers.

In conjunction with the update, RAM has also renamed the terminology used to assign ratings to insurance companies, from claims-paying ability rating (applicable to most entities in the insurance industry) and financial enhancement rating (applicable to financial guarantee insurers) to insurer financial strength (IFS) rating. The IFS rating recognises that insurers may have financial and/or debt obligations, on top of their obligations to policy/certificate holders. As such, RAM’s IFS rating indicates an insurer’s overall capacity to meet its financial obligations to policyholders and other creditors, including debt holders.

The changes in this update have no rating impact on RAM’s existing insurance and takaful portfolio as our overall analytical framework remains the same.

 

Analytical contact                                                       Media contact
Loh Kit Yoong                                                    Padthma Subbiah
(603) 7628 1031                                                (603) 7628 1162
kityoong@ram.com.my                                       padthma@ram.com.my

The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2016 by RAM Rating Services Berhad