A number of possible factors may affect the rating. For example, if the
risk profile of the company were suddenly to change (due either to the nature of the risks the company writes or the volumes accepted) and this were to lead to high volatility in technical results as well as increased capital pressures, there would probably be a negative effect on the rating.
Additionally, if the investment policy were to become much more
aggressive, it may have a negative impact on the rating. Another possibly negative factor would be if the terms of the loan to the parent were to change—either the loan amount becoming much larger, or the terms more preferential to the parent; this would need to be looked at very closely.
A key potentially positive driver of a rating would be the financial position of
the parent. If it were to improve and the significance and value of the captive were to increase, a positive movement of the rating would be considered.
More information on captives and ratings can be found on
www.ambest.com
Carlos Wong-Fupuy is senior director, analytics. He can be contacted at:
carlos.wong-fupuy@ambest.com
Yvette Essen is director, industry research, Europe and emerging markets. She can be contacted at:
yvette.essen@
ambest.com
emea captive 2012 21
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