Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

A.M. Best requests comments on draft criteria reports for cat bonds and sidecars


Ratings agency A.M. Best have published four updated draft criteria reports which relate to the insurance-linked securities market. They have updated and published draft criteria reports for their rating methodology for natural catastrophe bonds and sidecars. A.M. Best are requesting comments from market participants or other interested parties, so now is the time to have your say if you feel strongly about the way a rating agency approaches rating these instruments.

The four updated draft criteria reports are:

Assessing the Tail Risk of Sidecars (updates version dated Oct. 9, 2006)

Tail Risk and the BCAR (updates version dated Feb. 26, 2007)

Rating Sidecars (updates version dated June 28, 2006)

Natural Catastrophe Bonds (updates version dated Jan. 22, 2008)

A.M. Best say that the reports are being updated as part of their continual review of rating methodologies. None of the changes are considered material according to A.M. Best but this is a chance for the market to provide feedback on these documents so we do encourage you to read them.

The changes involve updates to the data used in any tables within the reports. The Natural Catastrophe Bonds report also describes the various types of triggers used in cat bond transactions, adds qualitative factors to the key rating factors and removes sponsor experience from other rating consideration.

A.M. Best say they will consider feedback from any interested parties. Written comments can be submitted by email to [email protected], no later than January 16, 2012

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