Industry Issues | ERM & Emerging Risks

S&P Global Ratings Proposes Insurer ERM Evaluation Framework

Proposal For Enterprise Risk Management Evaluations

S&P Global Ratings (SPG) is proposing a new product to analyze and evaluate insurance companies' enterprise risk management (ERM) practices. This ERM Evaluation is not to be a credit rating but an overall evaluation based on scores of the company's risk culture, risk exposure management, and risk optimization, as well as scores on sub-factors that affect risk exposure management.




S&P Global is seeking feedback on the proposed ERM Evaluation framework from investors,  issuers, and intermediaries. The newly developed framework is intended to provide a prospective view of an insurer's potential risk profile and change in capital position related to movements in risk drivers. According to SPG, the evaluation of insurance companies' ERM assesses whether an insurer executes risk management practices across the enterprise in a systematic and consistent manner, and the extent to which it effectively limits key risks within its appetite to optimally achieve its business goals and objectives.

SPG states that the final outcome will reflect S&P Global Ratings analysts' qualitative opinion of a company's ERM practices, informed by interactive discussions with senior management. The evaluation will utilize data that entities supply directly and will incorporate other data, where available. Again, the proposed ERM Evaluation is not a credit rating, a measure of credit risk, or a component of our credit rating methodology. However, the information SPG gathered from the ERM Evaluation will inform their credit analysis of rated entities. The ERM Evaluation will be a stand-alone, on-request service and separate from S&P Global credit ratings.

Company feedback to the proposed ERM Evaluation framework can be submitted via the following online survey feedback platform, https://spconsumerinsights.co1.qualtrics.com/jfe/form/SV_3wmyAbWoD3dKBH7.

APCIA members can also send any comment, questions or other feedback to david.kodama@apci.org.

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