A.M. Best Releases Methodology on Natural Catastrophe Stress Test

A.M. Best Co. has released an update to its methodology titled Natural Catastrophe Stress Test Methodology. The document is available on the Best's Credit Rating Methodology section of A.M. Best's homepage. Visit www.ambest.com/ratings/methodology.

The purpose of this methodology is to reiterate A.M. Best’s approach regarding natural catastrophe analysis and the impact on 
A.M. Best’s rating assignments. In addition, the paper is intended to highlight some recent revisions regarding the methodology and application of the “Natural Catastrophe Stress Test.” These revisions were developed based on analysis regarding reinsurance recoverable payment patterns related to several natural catastrophe events in recent years. In addition, A.M.

Best has observed improvement in companies’ natural catastrophe risk management. Accordingly, it is appropriate to modify the stress test to allow for greater differentiation in applying it to the risk-adjusted capital requirements with respect to the assessment of an organization’s catastrophe risk management practices and overall data quality.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com 

A.M. Best Co.AnalystsRichard Attanasio(908)

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