AM Best

AM Best’s Briefing – Captives & Cell Companies: Revisions to ‘Alternative Risk Transfer (ART)’ Criteria

January 29, 2025 | 2:00 p.m. GMT

Join senior AM Best analytical staff as they provide a detailed update on the proposed changes to our criteria procedure “Alternative Risk Transfer (ART).”

Renamed “Rating Captives and Other Alternative Risk Transfer Entities,” the criteria procedure includes proposed updates that establish a clear approach from AM Best to assigning financial strength ratings (FSRs) and issuer credit ratings (ICRs) to individual incorporated cell entities.

The panel will discuss the proposed changes to the criteria, which include:

Name and define cell companies and the various cell structures used in the insurance industry.
Map out how specific factors of unincorporated cell companies and individual incorporated cell entities are viewed within Best’s Credit Rating Methodology (BCRM) and support a path to assigning FSRs and ICRs.
Set a baseline operational level for individual incorporated cells to be considered for rating assignment.
Establish that AM Best analytical teams will likely use external parties to aid in the confirmation of a cell entity’s baseline operational and legal capabilities.
Affirm that the weakest-link approach remains the path to rating unincorporated cell companies.
Add an appendix supporting data requests of cell companies.

AM Best has been covering the ART sector for several decades. Today, we rate approximately 200 captive ventures in multiple jurisdictions. Although a rating on a captive (and other risk retention and cell companies) is comparable to any other rating issued by AM Best, we recognize that captives and ARTs serve special purposes and typically have an operating style that differs from the conventional market.

Moderator

Riccardo Ciccozzi
Director, Market Development - Europe

Panelists

Dr. Mathilde Jakobsen
Senior Director, Analytics (Amsterdam)

Myles Gould
Senior Director, Credit Rating Criteria Research & Analytics (London)