S&P’s updating its capital model

Standard & Poor’s Ratings Services (S&P’s) is updating its risk-based capital model.

S&P’s says it is currently testing newly developed capital factors against the latest capital model used in its analytics for a large number of companies globally. The outcome of this testing will inform fundamental changes S&P’s plans to make to its modeling of insurer capital adequacy.

Upon completion of testing, S&P’s says it will publish an article identifying all proposed risk-adjusted factors. The article will explain how each factor was developed and list risk profiles that are most and least affected by the proposed changes.

After the full article is released, S&P’s will be soliciting feedback from insurance companies and other interested market participants on the proposed revisions over a three-month period.

The updated capital model is expected to be finalized in 2006 Q4.