RAM Ratings releases rating criteria for non-operating insurance holding companies

Published on 14 Nov 2023.

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RAM Ratings has released a new rating criteria for non-operating insurance holding companies (IHCs), which typically control one or more insurance and/or reinsurance companies. Our assessment of non-operating IHCs is anchored by the credit strength of their core insurance/reinsurance subsidiaries or associates given that IHCs usually do not have meaningful or substantial operations of their own, as well as IHCs’ financial leverage at the company level. We had previously drawn on the rating approach for bank holding companies in rating IHCs.

The credit standing of a non-operating IHC is generally subordinated to the creditors of its core operating subsidiaries or associates as the latter are highly regulated and access to their funds is restricted. However, if a non-operating IHC exhibits certain characteristics, including little or no indebtedness at the holding company level, the non-operating IHC’s ratings need not be notched down from the credit strength of the insurance group for structural subordination.

In our review of the rated insurers and related entities within RAM’s portfolio, the new rating approach could result in an upgrade for one of the non-operating IHCs in RAM’s rating portfolio. We will make the relevant rating announcement upon the finalisation of the rating exercise, which we expect to conclude this month. 

The new criteria Rating Methodology for Non-Operating Insurance Holding Companies can be accessed under the Criteria & Methodology section of our website, www.ram.com.my.


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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 2023 by RAM Rating Services Berhad

Publication Date Published Category
Rating Methodology for Non-Operating Insurance Holding Companies 14-Nov-2023 Criteria & Methodology View PDF