OLDWICK, N.J.--(BUSINESS WIRE)--Stress tests show that most A.M. Best-rated insurers operating in Barbados have not been materially impacted by the factors driving a decline in the Caribbean country’s sovereign rating, although A.M. Best will continue to monitor the situation for possible ratings impact by applying additional stress tests and other analysis.
A new Best’s Briefing, titled, “Sovereign Downgrades and a Mounting Fiscal Deficit in Barbados Could Impact Insurer Ratings,” notes that Barbados’ sovereign rating has come under significant pressure in recent years due to increased government debt, reduced financing options, minimal fiscal reforms and limited monetary policy options. Due to these factors and the subsequent severity of the sovereign downgrades, A.M. Best evaluated the effect a potential sovereign default would have on rated insurers’ balance sheets, risk-adjusted capitalization and operations.
While A.M. Best does not employ a sovereign ceiling on its Credit Ratings, it does assess how these external factors would affect an insurer’s future business prospects, operating performance and capitalization. A.M. Best also factors in an organization’s risk management capabilities to navigate through these scenarios.
To access a complimentary copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=260232.
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