Best's Commentary: AM Best’s Credit Ratings and Country Risk FAQ – Why We Do Not Impose a Sovereign Ceiling on Our Ratings

A new Best’s Commentary addresses frequently asked questions about AM Best credit ratings and country risk.

The commentary explains that AM Best does not apply a sovereign ceiling on the insurance companies it rates, noting such a move would ignore a company’s ability to manage country risk by avoiding risk or by hedging, or by accepting what cannot be controlled and using counter measures such as additional capital, strong underwriting performance or diversification.

Some of the issues the commentary also addresses include:

• The difference between sovereign credit risk and country risk;
• An explanation of AM Best’s Country Risk Tiers;
• Whether a change (upgrade/downgrade) in a government’s sovereign credit rating result in a change in the Country Risk Tier; and
• Some of the key metrics used to determine the Country Risk Tier for a given country.

To access a complimentary copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=346985.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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