EXECUTIVE SUMMARY This issue of Perspectives explores S&P’s proposed overhaul of its risk-based capital (RBC) model and methodology for insurance companies, and some of the implications for insurer investment strategy. The last update of this significance by S&P to its capital model was over 10 years ago, so the update is timely. The proposed changes are designed to enhance global consistency, improve risk differentiation, reduce unnecessary complexity and increase transparency. At first glance, the proposed changes seem largely appropriate, but there are some interesting findings worth mentioning.
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