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Meeting with the management of a company is an integral part of A.M. Best's interactive rating process. Management meetings enable rating analysts to review with the company factors that may affect its rating, including strategic goals, financial objectives and management practices.
It is during these interactive meetings that a company typically will share information that may be extremely sensitive or proprietary in nature. As a rating meeting is a critical component in A.M. Best's analytical process, adequate preparation by the company is imperative.
During rating meetings, companies should be prepared to provide and discuss, in detail, a broad range of information that can vary depending on the company and the industry in which they operate. The assigned rating analyst typically provides a meeting agenda, outlining discussion topics that will guide the preparation effort. Below are sample meeting agendas and information requirements.
The primary source of the information is each company's annual and quarterly (if available) financial statements, as filed with the regulatory agency of the state, province or country in which the company is domiciled.
For a company new to the process, it is important to go through the history and business review issues, as well as the operating performance and overall capital position. For companies that are more familiar with the process, it is more important to focus on changes that have occurred since the last meeting. When there is a transaction pending or significant change in operating strategy and business plan, the focus of the meeting will be on such items. A.M. Best expects all information submitted by a company to be accurate and complete. Furthermore, A.M. Best expects that any information relevant to the rating process will be submitted on a timely basis.
Key executives should be present to discuss their areas of responsibility, including strategy, distribution, underwriting, reserving, investments, claims and overall financial results and projections. Depending on the size of the company, this can involve anywhere from one to six individuals.
Companies are encouraged to select a rating agency liaison that knows the company well and can respond to ongoing inquiries promptly. This is particularly important with significant events or transactions for which a company should provide advance notification, giving A.M. Best an opportunity to evaluate the effects of the transaction on the company's operations.
Information provided to A.M. Best by a company during a rating meeting may be extremely sensitive and/or proprietary. A.M. Best analysts are held to the highest standards of ethical and professional conduct in handling such information. A.M. Best has established policies and procedures to prevent unauthorized disclosure of confidential information and ratings prior to release. A.M. Best allows the use of confidential information only for purposes related to its rating activities or in accordance with any confidentiality agreements with the rated company.
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