S&P Requests ECM Comments

NU Online News Service, May 21, 12:25 p.m. EDT

Standard & Poor's Ratings Service is requesting comments on its proposed changes to its methodology for evaluating insurers' and reinsurers' economic capital models (ECM) through a refinement of its enterprise risk management criteria.

S&P said it proposes to refine its criteria for analyzing ECMs. As a starting point, the proposed criteria address S&P's conditions for establishing what the insurance industry terms the "credibility" of an insurer's ECM.

S&P said it views an insurer's ECM as an important means of evaluating the insurer's risks within a strong ERM program. In its view, S&P said a credible ECM and a strong ERM program are fundamental to an insurer's management and decision-making processes. The ECM, however, is only one component of S&P's analysis of an insurer's ERM.

Proposals and specific requests are outlined in the request for comment, "A New Level of Enterprise Risk Management Analysis: Methodology for Assessing Insurers' Economic Capital Models," published May 19, 2010.

The article is also available on S&P's website, www.standardandpoors.com, under Ratings Resources, by clicking on Ratings Criteria and then Requests for Comment.

S&P said it encourages market participants to submit written comments on the proposed criteria only, by July 19.

Written comments should be sent to CriteriaComments@Standardandpoors.com.