A.M. Best Releases New Criteria Procedure: Evaluating Mortgage Insurance
The 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 criteria procedure provides insight into the information requirements, key rating considerations, risk modeling and surveillance activities that generally will be applied by
In the risk-sharing programs discussed in this 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 risk associated with a reference pool of mortgage loans from the GSEs to the (re)insurance market. The criteria procedure outlines the process by which
One significant change was made to the draft criteria procedure since the call for comment on
The release of this new criteria procedure is not expected to result in any changes to A.M. Best’s outstanding ratings.
This criteria procedure is available at www3.ambest.com/ambv/ratingmethodology.
For a video interview with Emmanuel Modu, managing director, insurance-linked securities, about the new criteria procedure, please visit http://www.ambest.com/v.asp?v=criteria218.
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Emmanuel Modu, +1 908-439-2200, ext. 5356
Managing Director,
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Associate Director
Credit Rating Criteria, Research & Analytics
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Manager, Public Relations
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Director, Public Relations
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Source:
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