< PreviousCaptives 48 BEST’S REVIEW • OCTOBER 2022 Do captives remain underutilized in addressing cyberrisk, and do you see that changing anytime soon? Silvia: They are, and mostly because people are afraid of the risk. You can build into risk management programs for things like auto liability or for workers’ compensation. There are very clearly defined risk management tools that you can use. There is a feeling, though, that from a cyber perspective, you really are at the mercy of people who are not predictable, pirates, hackers, etc., so it makes it a little bit difficult. What we’re seeing is that those activities are actually not just reserved for the biggest corporations in the world. Now they’re coming into Main Street businesses. These things are crippling. I’ve read statistics that say that a smaller business that undergoes some cyberattack often doesn’t survive as a business and that they are literally destroyed as a result of it. You’ve got this very powerful dynamic that says you need this coverage. Then, on the other side of it, you’ve got the other part that balances that says, but it may not be available or not available at a price you can afford. Captives, again, a natural place to go with it. Just need someone to take their hand and bring them into that world in a way that makes sense. Any thoughts to share? Kudale: There are four out of five small to medium-sized businesses that do not have cyber insurance coverage. Most of the small businesses with an average ransomware cost just under $200,000 for a very small business. It’s very hard for them to reopen the business on Monday if there is a ransom attack on Friday night. This is where the entire closed-loop risk management is. It’s not just about continuous underwriting, it’s about also participating in risk-taking and helping those businesses improve their risks along the way, whether they’re policyholders or not, is very important going forward. Eslami: I agree with Jack and Dennis that captives are young, this whole risk is young, and it takes time and maturity for the industry to accept the risk within the captives. BR AM Best TV Visit www.bestreview.com to watch a video of this discussion. Best’s Rankings Largest Published, Rated Single-Parent Captive Insurers – 2022 Edition Captives were ranked by 2020 gross premiums written. (US$ Thousands) RankCompanyAMB#Country of DomicileGross Premiums WrittenUltimate Parent Name 1Solen Versicherungen AG056958Switzerland$1,219,929Royal Dutch Shell plc 2Jupiter Ins Ltd057796Guernsey583,000BP p.l.c. 3Noble Assur Co072672United States465,062Royal Dutch Shell plc 4Amer Road Ins Co000152United States366,049Ford Motor Company 5Kot Ins Co AG090728Switzerland364,863Petroleos Mexicanos 6Vine Court Assur Incorporated056604United States350,381Kroger Co 7Dorinco Reins Co003771United States304,772Dow Inc. 8Eni Ins Designated Activity Co090115Ireland260,697Eni S.p.A. 9Castle Harbour Ins Ltd073621Bermuda250,606Schlumberger Limited 10Greenval Ins Co DAC090329Ireland247,867BNP Paribas SA 11Agrinational Ins Co056005United States226,238Archer Daniels Midland Company 12Stellar Ins, Ltd.076969Bermuda180,329Saudi Arabian Oil Company 13Spirit Ins Co014365United States180,082Phillips 66 14Queen City Assur, Inc.075149United States170,516Kroger Co 15Builders Reins S.A.094157Luxembourg155,979ACS, Actividades de Construcción y Serv 16AES Global Ins Co075701United States153,598The AES Corporation 17Toyota Motor Ins Co011099United States149,991Toyota Motor Corporation 18Enel Ins N.V.094069Netherlands145,229Enel S.p.A. 19GreenStars BNP Paribas S.A.094271Luxembourg127,213BNP Paribas SA 20Harrington Sound Ins Ltd073622Bermuda121,396Schlumberger Limited Source: and AM Best research data as of Sept. 2, 2022.49 BEST’S REVIEW • OCTOBER 2022 Caribbean Insurers AM Best: Climate, Reinsurance and Cyber Remain High in the Caribbean Risk Landscape The Caribbean insurers rated by AM Best posted favorable earnings in 2021. Editor’s Note: The following is an excerpt from the Best’s Market Segment Report: Climate, Reinsurance, and Cyber Remain High in the Caribbean Risk Landscape. Visit www.ambest. com to access the full report. T he rated Caribbean insurers endured another challenging year in 2021, after negotiating a vast number of hurdles owing to COVID-19 in 2020, including government-imposed lockdowns, shelter-in-place restrictions, struggling economies and tepid investment markets. The pandemic tested the risk management and capabilities of both P/C and L/H insurers. Business continuity and growing cyberrisk threats came to the fore as companies adjusted to the reality of working remotely. Amid this backdrop, climate risk adds an additional layer of uncertainty as it remains the biggest threat to the Caribbean. The experience of Hurricanes Irma and Maria in 2017 and Hurricane Dorian in 2019, which resulted in significant economic losses across the Caribbean, have impacted risk appetites and pricing for reinsurance across the region. The region has experienced some respite in the benign loss years following Hurricane Dorian. Although the 2021 SWEEPING VISTA: A view of Nassau, capital of the Bahamas and its largest city. Climate risk is the biggest threat to the Caribbean region, according to AM Best.Caribbean Insurers 50 BEST’S REVIEW • OCTOBER 2022 hurricane season was very active, the region was spared any significant land-falling hurricanes. One hurricane, Elsa, did threaten the Caribbean in early July, but it weakened into a tropical storm the day after being named a hurricane; insured losses were estimated at US$50 million according to Karen Clark and Company. In August 2021, Haiti was struck by a 7.2 magnitude earthquake, which served as a reminder that the region is susceptible to not only wind events but also seismic activity. According to Karen Clark and Company, insured losses were estimated at US$250 million while economic losses were estimated between US$1 billion and US$7 billion, indicating that barely 15% of losses were insured—once again highlighting the significant protection gap in the region, as well as the major role that greater insurance penetration can play in narrowing that gap. Despite the low level of claims activity in 2021 and thus far in 2022, reinsurance pricing continues to reflect increased hardening as insurers and reinsurers are feeling the effects of inflation. Construction industry costs such as labor, lumber, and other raw materials have increased considerably and are reflected in higher loss costs for insurers and reinsurers. In addition, the growing frequency and severity of global catastrophic events have forced reinsurers to adopt a more circumspect approach to climate risk. In some instances, this has resulted in double jeopardy for Caribbean insurers in the form of higher reinsurance rates (more than 15%) and less capacity. A hardening casualty market and changing perspectives on property risk have caused reinsurers to allocate more capital to casualty risks and shy away from property exposures—a challenge for the Caribbean insurance market. The economic contraction experienced in many Caribbean countries also delayed the execution of a number of growth and strategic initiatives for insurers in the region. Caribbean insurers are now navigating through economic headwinds and market volatility spurred on by inflation, slower economic growth, and global geopolitical tensions. All of these are on the heels of what is still anticipated to be a busy Atlantic hurricane season. In its August 4, 2022 update, the National Oceanic and Atmospheric Administration (NOAA) Climate Prediction Center is forecasting a likely range of six to 10 hurricanes, including three to five major ones. Improvement in Overall 2021 Net Income for Property/Casualty Companies In 2021, the consolidated net income of the rated Caribbean P/C insurers improved over 2020 levels. In general, the group performed creditably in both years, with all but one insurer recording a loss, highlighting the risk management practices of the Caribbean P/C insurers AM Best rates. Some insurers posted lower earnings despite profitable results, attributable partly to the reopening of regional economies and the end of government- imposed lockdowns, which resulted in more normal claims utilization levels. Consequently, the 2021 consolidated loss ratio for rated P/C companies increased by 3.4 percentage points (to 47.4% from 44.0% in 2020), with most companies reporting higher loss ratios. Consolidated gross premiums for 2021 rose by 10.6%, reflecting continued price firming in certain territories, while net premiums rose by 5.3%, despite higher cessions by some companies. The overall combined ratio deteriorated slightly, to 95.3 from 94.8 in 2020, which had improved by 4.1 percentage points over 2019. Consolidated surplus increased by 3.2% over 2020 to US$853.9 billion, reflecting the group’s favorable earnings in 2021. 2021 Revenue for Life/Health Companies Improves Slightly The Caribbean L/H companies experienced a slight improvement in top line growth after emerging from the pandemic-related disruptions, as total revenue was up slightly. Both life and health premiums stabilized as insurers no longer had to provide premium relief to policyholders as economic conditions improved, stay-at-home restrictions abated, and tourism reversed from its bottom. Insurers with direct exposures to mortgage loans and bonds continued to experience declining valuations in certain regions, as companies analyzed their expected credit losses, probabilities of default, and assumptions on financial investments. As revenues and income stabilized due to an improving pandemic-related experience, the industry was able to generate earnings and 51 BEST’S REVIEW • OCTOBER 2022 absolute organic capital growth. In 2020, insurers benefited from a decline in health claims expenses because of changes in policyholder behavior and the drop in medical utilization due to stay-at-home conditions. Most of the improvement in net income was at Sagicor, which has broader geographic territories. Factors impacting income for insurers were related to improving premiums, growth in investment income and higher fee income, partially countered by a rise in claims payments as policyholders sought more health services than in the previous year. Consolidated equity grew by a modest 1.5%, compared to about 3% the previous year. In some cases, the capital improved owing to capital contributions from a parent company or organic growth in earnings. BR Best’s Rankings Largest Caribbean Insurers – 2022 Edition Insurers were ranked by 2020 gross premiums written. (US$ Thousands) RankCompany/GroupAMB#Country of DomicileGross Premiums WrittenCapital & Surplus 1Manufacturers Life Reins Ltd073838Barbados$11,160,131$802,208 2IAT Reins Co Ltd057453Cayman Islands2,044,1141,163,043 3RGA Atlantic Reins Co, Ltd.090222Barbados1,937,7721,441,213 4Royal Bank of Canada Ins Co Ltd.086956Cayman Islands1,844,7041,362,803 5T D Reins (Barbados) Inc056952Barbados1,539,690183,413 6NCB Finl Group Ltd044531Jamaica965,3421,429,463 7Greenlight Capital Re, Ltd.055430Cayman Islands479,791464,857 8Knight Ins Co Ltd.072139Cayman Islands472,603786,084 9Scotia Ins (Barbados) Ltd057051Barbados468,612169,060 10Best Meridian Intl Ins Co SPC086911Cayman Islands420,10375,521 11Lincoln Natl Reins Co (Barbados) Ltd057025Barbados392,0002,558,000 12BMO Reinsurance Ltd056229Barbados387,953129,273 13Barents Re Reins Co, Inc.091083Cayman Islands386,270515,845 14London Life & Cas Reins Corp086037Barbados366,946532,032 15Energy Ins Mutual Ltd085496Barbados325,4631,188,719 16Raffles Ins Ltd055019Cayman Islands320,042473,222 17Sagicor Life Jamaica Ltd086086Jamaica319,344399,550 18Seguros Universal, S.A.087832Dominican Republic303,47193,665 19Ocean Intl Reins Co Ltd093077Barbados230,933110,749 20Humano Seguros S.A.071369Dominican Republic208,27066,725 21CG United Ins Ltd.086916Barbados198,11275,479 22Seguros Reservas S.A.092870Dominican Republic179,95897,031 23Inreco Intl Reins Co075491Cayman Islands167,784296,816 24Accelerant Hldgs045356Cayman Islands164,90082,000 25Bahamas First Hldgs Ltd087007Bahamas160,56864,521 26Mapfre BHD Compania de Seguros SA084257Dominican Republic145,32470,193 27Island Heritage Ins Co, Ltd.086644Cayman Islands142,02854,987 28Wentworth Ins Co Ltd086298Barbados135,748267,310 29Fortegra Indemnity Ins Co LTD075015Turks And Caicos128,81244,105 30Colina Ins Ltd089077Bahamas124,089155,489 Sources: and AM Best research data as of Aug. 31, 2022.Best’s Rankings 52 BEST’S REVIEW • OCTOBER 2020 Best’s Rankings US Life/Health – 2021 Asset Distribution – 2022 Edition Ranked by 2021 total admitted assets. ($ Millions) 2021 Rank 2020 RankCompany/GroupAMB#Bonds % of AssetsMortgages % of Assets Separate Accounts % of Assets Total Assets Net Yield on Invested Assets Before Federal Income Tax, if Any 20212020201920182017 11Prudential of America Group070189$113,38120.2$23,6864.2$367,41865.6$560,0603.403.403.703.903.90 22MetLife Life Ins Companies070192169,15236.758,10212.6155,64933.7461,4374.404.605.105.705.20 33New York Life Group069714221,37656.335,1558.972,95118.6392,9164.103.904.304.204.30 44Massachusetts Mutual Life Group069702161,93144.329,5438.184,02223.0365,4464.004.304.304.704.30 55TIAA Group*070362210,15458.336,79310.256,06115.6360,2244.504.304.504.704.70 66AIG Life & Retirement Group070342166,53348.232,1629.3122,02435.3345,8255.004.404.705.004.80 78Northwestern Mutual Group069515179,30953.647,84414.342,38312.7334,7563.604.204.104.204.20 87Lincoln Finl Group07035193,70928.015,8264.7198,72259.4334,5083.803.804.304.104.70 910Jackson Natl Group06957849,24815.311,5773.6249,05377.4321,9144.704.705.105.205.90 109John Hancock Life Insurance Group06954263,28620.512,5664.1184,26659.6309,1764.404.104.705.004.80 1111Equitable Life Group07019448,24718.911,5334.5182,61471.7254,856-0.401.701.307.404.20 1213Principal Finl Group Inc.02051660,36325.115,9196.6152,28063.4240,1904.004.004.304.404.20 1312Aegon USA Group06970755,71623.410,7894.5152,75164.1238,3384.204.604.104.104.70 1414Nationwide Life Group07035066,75929.015,4736.7138,71960.2230,2845.104.004.104.204.50 1515Brighthouse Ins Group07051653,62524.112,6485.7140,55463.3222,0943.903.904.404.304.30 1618Pacific Life Group06972071,88038.616,3018.873,93339.7186,1513.303.604.703.904.50 1717Great-West Life Group07036653,93529.39,9655.4101,10254.9184,1062.903.003.703.803.80 1816Allianz Life Ins Group07018794,39752.917,1549.652,72629.5178,4433.903.904.004.004.20 1922Athene US Life Group07047874,92550.418,84012.731,00520.8148,7695.604.604.806.105.90 2019Voya Finl Group07015332,71522.35,6263.8101,15169.1146,4844.504.804.704.704.60 2120Talcott Resolution Group 07011618,19213.31,9761.4110,68481.1136,5104.604.404.504.104.20 2221Ameriprise Finl Group06968910,7528.71,6641.396,80678.4123,4683.604.004.304.304.60 2325Global Atlantic Group 06978679,68666.220,53417.15,5984.6120,4023.803.805.204.305.20 2423Thrivent Finl for Lutherans00600848,72342.210,2728.941,95336.3115,5425.704.304.604.404.60 2524Sammons Finl Group06973181,02473.95,7255.26,5316.0109,6275.604.204.404.305.80 Top 25 Insurers$2,279,01635.5$477,6687.4$2,920,95645.5$6,421,5274.234.174.484.764.74 Total U.S. Life/Health Industry$3,534,39940.8$639,8517.4$3,348,16338.6$8,669,0334.204.104.404.504.50 *TIAA assets are significantly understated. Most of its separate account assets are in its affiliate, CREF. Source:— Statement File - L/H, US; data as of Aug. 15, 2022.53 BEST’S REVIEW • OCTOBER 2022 Underwriting & Loss Control Legalized Recreational Marijuana Is a Growing Business With Insurance Challenges Best’s Underwriting Reports and Best’s Loss Control Reports provide insights into the lines of coverage, exposures and loss control for recreational marijuana dispensaries. T he use of recreational marijuana has been legalized in 19 states and the District of Columbia, with more states considering the possibility, according to the National Organization for the Reform of Marijuana Laws. Voters in several states and cities are voting in referendums nationally to legalize the sale of recreational marijuana. Voters in Colorado Springs, Colorado, for example, will head to the polls to vote on the sale of recreational marijuana within city limits this fall. But while sales of cannabis initially rocketed to millions of dollars in those states, others are seeing prices come down due to market saturation. Some states are having a hard time getting the legal cannabis industry off the ground, and insurance surrounding recreational marijuana continues to be an issue. Many large insurers are avoiding insuring state-approved cannabis-related businesses, but for those who do, there are a number of risks and obstacles that need to be considered, according to Best’s Underwriting and Loss Control Resources. “Because it is still considered a Schedule 1 drug by the federal government, it’s very hard to get bank accounts for these dispensaries, so most of the dispensaries are cash-only businesses,” Best’s Underwriting and Loss Control Resources Senior Assistant Editor Suzanne LaCorte said. Number of Dispensaries Is Growing In Michigan, this year alone, the number of growers increased by 71% and the number of retailers has grown by 17%, according to The Oakland Press. Legal sales of recreational marijuana in New Jersey began in April, according to dispensaries.com. In California, the Los Angeles Times writes that “high taxes, local bans and overregulation” are making it difficult for state-licensed vendors to compete with black market dealers. As the number of recreational marijuana dispensaries has grown, Best’s Underwriting Report has identified 10 lines of coverage for the businesses and has ranked the risk exposure associated with the challenges facing the industry. Those lines are Automobile Liability; General Liability: Process and Operations; General Liability: Products- Completed Operations; Directors and Officers Liability; Employment Practices Liability; Workers’ Compensation; Crime; Property; Business Interruption; and Inland Marine. Best’s Hazard Index ranks the risk exposure for the Lines of Business as Low (1-3), Medium (4-6), and High (7-9). Following are excerpts of the Lines of Coverage reports that have the highest hazard index rankings. Lines of Coverage Crime The crime exposure for medical marijuana dispensaries will be substantial due to the potential for robberies. Most American dispensaries will only accept cash for purchases because of U.S. federal banking laws that prohibit banks from doing business with companies that cultivate, process or sell marijuana. An employee dishonesty exposure in the form of pilferage of products and embezzlement could also exist. General Liability: Process and Operations The General Liability: Premises and Operations exposure for marijuana dispensaries will be significant due to the potentially large number of daily visitors. Visitors will include customers, delivery personnel, and government inspectors. Slips, trips, and falls will be the main exposure. A Cyber Insurance Liability exposure will exist if the dispensary stores customer information on a computer network that can be accessed through the Internet. Best’s Hazard Index Line of Coverage Best’s Hazard Index Crime7 General Liability: Process and Operations6 General Liability: Products-Completed Operations:6Photo by FREDERIC J. BROWN/AFP via Getty Images54 BEST’S REVIEW • OCTOBER 2022 Underwriting & Loss Control General Liability: Products-Completed Operations The General Liability: Products — Completed Operations exposure for marijuana dispensaries will be significant due to the potential for mold, fungus, pesticides, and other contaminants in the products, which could make customers sick. Because there are no federal regulations regarding testing the quality of the cannabis products, states have developed their own regulations regarding testing, labeling, and packaging. However, some product labels might not identify the appropriate use or strength of the marijuana, which could result in claims. If the insured bakes or makes marijuana-infused edibles (e.g., brownies, cookies, gummy bears), then this exposure will be increased due to the potential for the food spoiling or for inaccurate dosages in each piece. Because there could be overlap between General Liability: Products — Completed Operations and Professional Liability, both lines of coverage should be written by the same insurer for the same limits if possible. Loss Control On-Site Inspection: • Does the insured have a vault equipped with several tool-, torch-, explosive-, water-, and fire-resistant, NRTL-listed, time-delay safes where cash and marijuana are stored? • Motion alarms and biometric locks installed throughout the premises • Security cameras placed throughout the premises, including near vaults • Layout of the premises • Are “Employees Only” signs posted outside of all storage areas from which visitors are prohibited, such as where cannabis products are stored? • Stock rooms equipped with self-locking doors • What types of marijuana does the insured sell? • Is there a kitchen on site where the insured prepares cookies, candies and other marijuana-infused edibles? • For edibles, are all ingredients, including nuts, wheat, and other allergens, clearly stated on all packages? – Anthony Bellano Bring Unseen Risks to the Surface expand your knowledge of the businesses and industries you are evaluating with Best’s Underwriting Reports and Best’s Loss Control Reports. Written from an underwriter’s and loss control professional’s perspective, these detailed, yet concise reports include the information you need to efficiently assess risk and exposures. 21.BUG007FA Our Insight, Your Advantage ™ Learn more: sales@ambest.com www.ambest.com • (908) 439-2200 For more on this and other risk classifications, visit Best’s Underwriting & Loss Control Resources.55 BEST’S REVIEW • OCTOBER 2022 AM Best: Dedicated Reinsurance Capital Growth of 2021 May Not Continue Traditional reinsurance capacity projected to fall as third-party capital holds steady. Editor’s Note: The following is an excerpt from the Best’s Market Segment Report: Dedicated Reinsurance Capital Growth of 2021 May Not Continue. Visit www.ambest.com to access the full report. F or the past 10 years, AM Best and Guy Carpenter have jointly estimated the amount of global capital dedicated to support the reinsurance market, with AM Best determining traditional reinsurance capital and Guy Carpenter determining third-party capital. The global reinsurance market has evolved over the past decade, as has the capital supporting it. Third-party capital and large commercial lines capacity are more closely aligned with reinsurance business models, which has impacted not just the levels of capital, but also their utilization. The majority of reinsurance market participants now have primary insurance operations as well as third-party capital capabilities, blurring the lines between reinsurance capital and other activities and business lines at individual organizations. AM Best’s estimate of dedicated reinsurance capital is derived from incisive analysis and consistent aggregation methods, resulting in a more accurate picture of capital backing the reinsurance market. Pure reinsurers with a global reach are rare, as “global reinsurers” are engaged in business other than reinsurance, covering specialty areas, large commercial lines, surplus lines, and other interests. Typically, not all of a company’s capacity is allocated to its reinsurance business. AM Best’s estimate of traditional reinsurance capacity takes into account the allocations by business classification. Since year-end 2018, our estimate has been less than 60% of total shareholders’ equity of the consolidated figures for groups identifying as reinsurance writers. As reinsurers expand further into other primary insurance lines and other activities, more in-depth analysis will be needed to determine these estimates. What AM Best Says56 BEST’S REVIEW • OCTOBER 2022 What AM Best Says Traditional Capital Up in 2021 Traditional reinsurance capacity increased 10.7%, from US$429 billion at December 31, 2020, to US$475 billion at December 31, 2021 but is projected to fall to US$435 billion at year-end 2022. The increase from 2020 to 2021 was due primarily to the rise in shareholders’ equity among market participants as a result of substantially improved underwriting returns and strong equity market growth. The AM Best Global Reinsurance Composite reported its lowest combined ratio in five years in 2021 (96.4); equity values grew roughly 17%, partially countered by anemic fixed- income investment returns. Rates hardened in many reinsurance lines in 2021, boosting underwriting performance. An improvement in reserve development was driven by the generally conservative COVID-19 reserves recorded in 2020, as well as a slowdown in U.S social inflation, which may be transitory in nature as U.S. courts catch up on their backlog and entertain civil case activity again. The increase in frequency and severity of catastrophic events, including Winter Storm Uri and Hurricane Ida in the United States and the Bernd floods in Europe, partially counterbalanced the impact of the strong investment gains, the improvement in underlying underwriting performance, and reserve releases throughout the year. The final reason for higher traditional reinsurance capital levels at year- end 2021 was the persistently low interest rate environment, which allowed companies to access affordable debt financing and use the capital to support growth and financing objectives, including lowering the cost of capital. Third-Party Capital Reallocates Guy Carpenter estimates relatively stable third- party capital for 2022, despite notable shifts in the insurance-linked securities (ILS) market. The downturn in the US equity market has posed capital supply challenges for some ILS funds, given investor portfolio allocation percentage caps. The muted returns of aggregate-focused covers are another pressure point for investors. However, the pullback of traditional reinsurance in catastrophe- exposed markets such as Florida has created opportunities for ILS funds. By taking advantage of the lack of capacity, some ILS funds have been able to capitalize not only on significant price increases, but also tighter terms and conditions. Reinsurers with third-party capital facilities generally are supported by large, long-term institutional investors seeking diversification and higher yields. The higher yields in the ILS market are a function of (1) higher interest rates and (2) higher risk premiums in the natural catastrophe reinsurance market due to uncertainty caused by climate change (which translates into modeling risk), ultimately leading to higher rates on line. However, the geographic diversification of these investors is growing, with a significant portion originating outside the United States. ILS investments have benefited from a lack of correlation with the financial markets. Despite the possibly greater correlation of casualty-focused ILS, there are signs of early but growing market interest in non-catastrophe exposed transactions. Some deals have addressed investor concerns about the liquidity lockup of the longer-tail casualty business, while the relative absence of volatility has been an appealing offset to natural catastrophe business. 2022 Estimates Very Uncertain But Generally Unfavorable The rising underwriting rate environment and improving terms and conditions of the past five years have been accretive to capital levels. These favorable market conditions have been partially counterbalanced by elevated catastrophic losses that have been detrimental to operating returns, although the losses have been characterized as “earnings events,” rather than capital-deteriorating events. Although underwriting returns for many companies have been close to break even in recent years, capital levels grew through investment gains and inexpensive debt financing. However, the start of 2022 has seen a reversal of most of these conditions. Underwriting results for the first half of 2022 have been generally favorable, aided by rate increases in prior years. Accurately resolving losses associated with the Russia/Ukraine conflict will take some time, although reinsurers are cautiously optimistic about insured loss development in the region. Market conditions for reinsurance—in both the property and casualty lines (except workers’ compensation)—continue to improve, which has resulted in compounding rate activity year-over-year and more favorable terms and conditions. BR FORECAST THE IMPACT OF CHANGING CONDITIONS ON FINANCIAL STRENGTH In today’s rapidly changing market conditions, Best’s Capital Adequacy Ratio Model – P/C, US delivers the tools you need to assess an insurer’s risk-adjusted capitalization through customizable risk scenarios, using a model consistent with AM Best’s rating methodology. NOTE: The results or output created by use of the Best’s Capital Adequacy Ratio (BCAR) Model (“Output”) is for informational and internal purposes only, and such Output may not match or be consistent with the official BCAR scores that AM Best publishes for the same rating unit. The Output is not guaranteed or warranted in any respect by AM Best. The BCAR Model is a non-rating services product, and its purchase is not required as part of the rating process. 22.BCAR017A Our Insight, Your Advantage ™ Learn More: sales@ambest.com www.ambest.com • (908) 439-2200 22.BCAR017_BCAR US_AD.indd 19/9/2022 11:39:00 AMNext >