Preparing for a Rating Meeting

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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.

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.

Four Key Elements

Key elements to maintaining a mutually successful relationship with A.M. Best are:

  1. Honest and open dialogue. Make sure that the person you select as your rating agency liaison knows your company well and can manage the relationship with A.M. Best in a positive and productive manner. Discussions concerning your company's positives and negatives should always be frank. Expect the same from A.M. Best.
  2. Full and timely disclosure of company information and plans. This includes your company's vision, mission and strategy, as well as financial statements and projections, rationales and details of any transactions and sales results.
  3. Full preparation for rating meetings. In general, you should be prepared to discuss, in detail, a broad range of information, including corporate overview, strategic plan, business lines, financial overview, investments, operations and technology. All information should be compiled and disseminated for review prior to the meeting. For any meeting to be successful, your key executives must be present and be prepared for the discussion.
  4. Advance notification of significant transactions. Advance notification, including background information, of significant transactions should be provided. This gives A.M. Best analysts an opportunity to evaluate the effects of the transaction on your company's operations before reacting to public inquiries. All such information is considered proprietary and will be held in the strictest confidence by A.M. Best.
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