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, market risk sensitivities 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.
Last updated 2013/12/20