Rating agency and regulatory changes driven by increasing ERM expectations and transparency

MONTE CARLO, Sept. 10, 2012 /PRNewswire/ --Aon Benfield, the global reinsurance intermediary and capital advisor of Aon plc (NYSE:AON), today launches its annual Evolving Criteria report, which reviews the latest developments in rating agency protocol and examines important regulatory issues affecting the industry.

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The report, entitled Looking Back to Anticipate Change Moving Forward, highlights key rating agency criteria and regulatory developments – including rating agency Standard & Poor's proposed rating methodologies – and the increasing importance of Enterprise Risk Management (ERM) in ratings frameworks.

It also examines how economic capital models are being evaluated, the developments regarding Solvency II and the National Association of Insurance Commissioners (NAIC)'s Own Risk and Solvency Assessment (ORSA), and how ERM and increased transparency are common threads to many of the criteria changes.

In addition, the report reviews rating agency trends and industry outlooks revealing that several key topics have been driving rating agency discussions, including the natural catastrophe losses of 2011, catastrophe model updates, and concern over reserve adequacy. Also, the debt crisis In Europe, a softening pricing environment, and subdued investment returns are affecting insurers' profitability and leading to negative rating actions.

Kelly Superczynski, Aon Benfield Head of Global Rating Agency Advisory, said: "Across the multitude of rating agency methodology proposals and updates over the past year, we see a general move towards a requirement for ever more detailed financial analyses that include a greater volume of non-public data, with the aim of creating global consistency in terms of methodology application, as well as an increase in the overall transparency of the ratings process. Rating agencies and regulators continue to increase the importance and growing expectations of risk management for companies of all size and complexity.

Reinsurance has been a valuable risk management tool for companies to manage catastrophe exposure, capital requirements, earnings volatility and setting risk tolerances."

The report provides a global perspective on key criteria changes and also discusses specific developments in the regions of the United States, Europe and Asia Pacific. In addition to the key considerations of major rating agencies and regulators, the report looks at the trend towards GAAP and IFRS convergence in creating a common reporting standard and framework.

To view the full Evolving Criteria report, please follow the link below:
http://thoughtleadership.aonbenfield.com/Documents/20120910_ab_analytics_evolving_criteria.pdf

About Aon Benfield

Aon Benfield, a division of Aon plc, is the world's leading reinsurance intermediary and full-service capital advisor. We empower our clients to better understand, manage and transfer risk through innovative solutions and personalized access to all forms of global reinsurance capital across treaty, facultative and capital markets. As a trusted advocate, we deliver local reach to the world's markets, an unparalleled investment in innovative analytics, including catastrophe management, actuarial and rating agency advisory. Through our professionals' expertise and experience, we advise clients in making optimal capital choices that will empower results and improve operational effectiveness for their business. With more than 80 offices in 50 countries, our worldwide client base has access to the broadest portfolio of integrated capital solutions and services. To learn how Aon Benfield helps empower results, please visit aonbenfield.com.

About Aon

Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 61,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world's best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon's global partnership and shirt sponsorship with Manchester United.

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