The methodology explains KBRA’s process for assessing the financial strength of captive insurers.
It incorporates both quantitative and qualitative analysis of the captive insurer, as well as an evaluation of the strategic importance of the captive insurance company to its owners. It also considers whether its owner enhances or diminishes the financial strength of the captive insurer.
Other factors the ratings company considers include the quality of capital, reserving practices, leverage, reinsurance, operating fundamentals, the regulatory environment, risk management and sovereign risk.
The proposed methodology is open for comment on KBRA’s website until 18 August.