DBRS Morningstar Publishes Final Global Methodology for Rating Insurance Companies and Insurance Organizations

DBRS Morningstar finalized its “Global Methodology for Rating Insurance Companies and Insurance Organizations” (the Methodology).

This Methodology presents the criteria for which the ratings of insurance companies (including mortgage insurance companies) are assigned and/or monitored globally. The Methodology supersedes the prior version published on July 16, 2021, and is effective as of August 31, 2022.

The updates to the Methodology described in the July 22, 2022, Request for Comment were implemented as proposed in the final Methodology. The main update is the merging of the existing “Global Methodology for Rating Mortgage Insurance Companies” into the now expanded Methodology, which helps maintain a consistent treatment for a broader universe of insurance organizations. Given that the underlying rating considerations for the analytical framework remain mostly unchanged, DBRS Morningstar does not expect this change to lead to any immediate impact on existing ratings of mortgage insurance companies.

Additionally, the update incorporates a few minor considerations into the text. In particular, we have further clarified the following: (1) credit risk assumed through insurance products is assessed as part of the product risk factor; (2) short-term debt instruments and funding agreements considered as operational liabilities are excluded from the leverage ratio calculations; and (3) new language has been added regarding the rating treatment of Funding Agreement-Backed Securities, Surplus Notes, and Limited Recourse Capital Notes.

All comments received during the request for comment period have been published to the DBRS Morningstar website, except in cases where confidentiality is requested by the respondent.

Notes:
DBRS Morningstar methodologies are publicly available on its website www.dbrsmorningstar.com under Methodologies & Criteria.

For more information on this methodology, or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].