Global rating agency AM Best has announced that it is developing a stress test that it will conduct on its rated insurance agencies’ balance sheets to assess the effect of the COVID-19 outbreak on their risk-adjusted capital levels, investment portfolios, reserve adequacy and other risk factors.
“The COVID-19 virus is unique in its scope and complexity of potential losses, and the uncertainty regarding the near-term impacts further exacerbates the situation,” AM Best said. “Consequently, the direct and indirect effects of the outbreak may not be understood fully for some time. AM Best has conducted stress tests of this nature following previous then-unprecedented events, such as Sept. 11 or the Eurozone crisis.”
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