Fitch Launches New Capital Model

Fitch Ratings today began its formal introductory for Prism, the company's global insurance capital model that will ultimately be used to evaluate a carrier's capital adequacy.

This 'beta' version of Prism, now available for property-casualty and life insurers in the United States, allows carriers to examine preliminary results of how they would perform under Prism, and what their capital requirements may be at various ratings thresholds.

All U.S. insurers–both those currently rated by Fitch and those that are not–may participate in beta testing by completing a data survey that can be downloaded from Fitch's Web site and returned to Fitch.

“This introductory period, which will last for five-to-six months, is a critical step in our launch of Prism within the global insurance markets,” said Keith M. Buckley, Global Head of Insurance for Fitch Ratings.

Fitch will seek market feedback during this introductory period, and will continue to calibrate Prism's assumptions based on this ongoing feedback. All preliminary results derived during the Prism Introductory Period will remain unpublished and will not be considered in Fitch's rating analysis, the company said.

After the close of the introductory period, currently targeted for early 2007, Fitch said it will execute its final version of Prism.

While the beta versions of Prism are now available only in the U.S., they are expected to be available in France, Germany and the U.K. near the end of the third quarter of 2006.

Mr. Buckley said Fitch built Prism using state-of-the-art technologies to generate results based on thousands of scenarios, reviewing hundreds of risk curves and generating billions of calculations.

The launch of Prism is complementary to Fitch's use of insurers' own in-house capital models in evaluating capital adequacy for ratings purposes, he added.