A.M. Best Requests Comments on Draft Criteria: Evaluating Mortgage Insurance

OLDWICK, N.J.--()--A.M. Best is requesting comments from market participants in the insurance industry and other interested parties on the draft of a new criteria procedure, “Evaluating Mortgage Insurance.”

The draft criteria procedure focuses on A.M. Best’s approach to: 1) rating mortgage insurers and 2) assessing the risk charge associated with insurance-based credit risk transfer initiatives by the two government-sponsored enterprises (GSEs), Freddie Mac and Fannie Mae.

Mortgage insurance protects mortgage lenders by ceding a portion of the mortgage risk from lenders to insurers, thus providing an added layer of credit protection should the homeowner default. The draft criteria procedure provides insight into the information requirements, key rating considerations, risk modeling and surveillance activities that generally will be applied by A.M. Best when rating mortgage insurers.

In the risk-sharing programs discussed in this draft criteria procedure, the GSEs compensate (re)insurance companies for sharing in the mortgage credit risk undertaken by the GSEs. Specifically, these programs are designed to transfer a portion of the credit risks associated with a reference pool of mortgage loans from the GSEs to the (re)insurance market. The draft criteria procedure outlines the process by which A.M. Best will evaluate this risk within the framework of A.M. Best’s capital model, Best’s Capital Adequacy Ratio (BCAR).

This draft criteria procedure is available at www.ambest.com/ratings/methodology.

Written comments should be submitted by e-mail to methodology.commentary@ambest.com no later than May 1, 2017. When submitting comments to the methodology in-box, commenters have the option of requesting anonymity, but not confidentiality. All comments received through the methodology in-box that do not request anonymous treatment will generally be published in their entirety, with attribution to the author/sender at the time of implementation of the criteria procedure.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Emmanuel Modu, +1-908-439-2200, ext. 5356
Managing Director,
Insurance-Linked Securities
emmanuel.modu@ambest.com
or
Maura McGuigan, +1-908-439-2200, ext. 5317
Associate Director
Credit Rating Criteria, Research & Analytics
maura.mcguigan@ambest.com
or
Christopher Sharkey, +1-908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1-908-439-2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best
Emmanuel Modu, +1-908-439-2200, ext. 5356
Managing Director,
Insurance-Linked Securities
emmanuel.modu@ambest.com
or
Maura McGuigan, +1-908-439-2200, ext. 5317
Associate Director
Credit Rating Criteria, Research & Analytics
maura.mcguigan@ambest.com
or
Christopher Sharkey, +1-908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1-908-439-2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com