why does A.M. Best use a sensitivity analysis to supplement its BCAR calculation

oxalis

I have no clue what the answers even means... can you please provide some explanation?

assess capital required to support future business
assess impact of a pro-forma transaction (acquisition of a subsidiary)
assess projected year-end capital position

Staff-T1

After calculating their initial BCAR score, A.M. best does a sensitivity analysis to:

• Assess capital required to support future business. How will the BCAR score change due to changes in the business plan
• Assess impact of a pro-forma transaction (acquisition of a subsidiary). How will the BCAR score change due to the acquisition of a subsidiary
• Assess projected year end capital position. A.M. best calculates a stressed BCAR score and if its stressed BCAR score falls considerably and the potential to recover from a capital shortfall is low, it may receive a revised BCAR score that differs from its standard BCAR assessment

oxalis

thank you so much!!