OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. is requesting comments from market participants in the insurance industry and other interested parties on the following draft criteria reports:

• “Understanding Universal BCAR” (updates version dated March 25, 2013)
• “Understanding BCAR for U.S. Property/Casualty Insurers” (updates version dated March 25, 2013)
• “Understanding BCAR for Canadian Property/Casualty Insurers” (updates version dated March 25, 2013)

Proposed edits to the draft criteria report, “Understanding Universal BCAR,” includes new wording for the treatment of unearned premium associated with long duration property/casualty contracts. In addition, the draft version contains edits to make the approach for evaluating U.S. surplus notes in Best’s Capital Adequacy Ratio (BCAR) consistent with the approach explained in the new criteria report, “Evaluating U.S. Surplus Notes.”

The draft criteria report, “Understanding BCAR for U.S. Property/Casualty Insurers,” includes updates to the thresholds for growth charges and new wording for the treatment of unearned premium associated with long duration contracts. The draft version contains edits to make the approach for evaluating U.S. surplus notes in BCAR consistent with the approach explained in the new criteria report, “Evaluating U.S. Surplus Notes.” In addition, the title “Understanding BCAR for Property/Casualty Insurers” has been changed to “Understanding BCAR for U.S. Property/Casualty Insurers.”

The draft criteria report, “Understanding BCAR for Canadian Property/Casualty Insurers” includes new wording for the treatment of unearned premium associated with long duration contracts.

The treatment of unearned premium associated with long duration property/casualty contracts is being added to these criteria because of the larger unearned premium created by long duration contracts relative to typical property/casualty contracts, which have coverage terms of one year or less. These updates are part of A.M. Best’s continual review of its rating methodology and are not expected to affect ratings.

Visit www.ambest.com/ratings/methodology to download a PDF copy of each report.

Written comments should be submitted by email to rating.methodology@ambest.com no later than March 6, 2014. The details of any comments received may be made public, unless specifically requested to be kept confidential.

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