The Risk-based Premium Rating System was formulated by referring the Uniform Financial Institutions Rating System (often referred to as "CAMELS") of the U.S. Federal Financial Institutions Examination Council. The system applies seven categories of indexes for assessment, including capital adequacy, asset quality, management ability, earnings, liquidity, sensitivity to market risk and others. Moreover, based on the characteristics of each peer group of financial institutions, assessment indexes for each assessment category are selected. These indexes are then weighted and allocated according to their attributes and importance. A composite score is then calculated for each financial institution. Based on the composite score, each financial institution is assigned one of the following five rankings (A, B, C, D, and E) based on
its operational condition:
A: Strong Performance
B: Satisfactory Performance
C: Fair Performance
D: Unsatisfactory Performance
E: Hazardous Performance
The composite score generated by the Risk-based Premium Rating System serves as one risk indicator to
calculate the risk premium rate of an insured institution.
A financial institution assessed to meet one of the following criteria will be defined as a financial institution in poor operating condition and should be subject to attention:
(1) It gets an "E" ranking under the Risk-based Premium Rating System ; or
(2) Its adjusted net worth is less than two-thirds of its net worth, share capital or reserved funds; or
(3) Its capital adequacy ratio falls short of the requirement set by the competent authority; or
(4) Its operations are at risk due to management frauds, serious conflicts among internal factions or other major incidents.