Fitch published updated insurance notching criteria on 14 July 2015, following publication of an initial exposure draft of proposed criteria on 12 May 2015. The updated notching criteria appear in Section VI of the insurance master criteria report Insurance Rating Methodology.
Notching refers to the practice of establishing a given rating relative to a defined "anchor" rating, using guidelines linked to certain characteristics of the rating that is being notched. For Fitch's insurance ratings, the Insurer Financial Strength (IFS) Rating is the initial anchor rating, and other ratings that are notched relative to it include Issuer Default Ratings (IDRs) of operating and holding companies, and debt/hybrid obligation ratings.
Fitch updated its notching criteria in light of changes in the regulatory landscape, including the movement in Europe and other jurisdictions to Solvency 2 or a Solvency 2-type regulatory framework. As a result, from a global perspective, notching changes are more pronounced in Europe and other such jurisdictions, and more limited in the U.S. and similarly regulated countries.