Best’s Capital Adequacy Relativity
What Does Best’s Capital Adequacy Relativity Mean?
Best’s Capital Adequacy Relativity (BCAR) is a rating provided by an insurance ratings agency. This rating is based on the balance sheets, financial performance, and underwriting activities of the insurance companies being evaluated. While all of these factors contribute to determining a company’s BCAR rating, the balance sheet is given the greatest emphasis.
Insuranceopedia Explains Best’s Capital Adequacy Relativity
A.M. Best is a rating agency that specializes in evaluating insurance companies. It is widely recognized in the United States and, more importantly, within the insurance industry as one of the leading ratings agencies.
When assessing an insurance company’s BCAR, A.M. Best places particular emphasis on the company’s balance sheet. This is because the balance sheet reveals whether the company has sufficient financial assets to cover the benefits of the policies it has issued. Specifically, A.M. Best focuses on the policyholder’s surplus, as it is a reliable indicator of the company’s ability to pay for future coverage.
