HICS: Methodology (scoring and weighting)

A number of factors and metrics are widely considered relevant in assessing the financial strength and credit risk of issuers / counterparties.

Please see our ‘HICS: Methodology (scoring and weighting)’ presentation for full details and explanation of the HICS methodology, scoring and weighting.

The presentation explains: each of the HICS Factors; the scoring system for each HICS Factor; the weighting of each HICS Factor within each HICS Category; the scoring system for each HICS Category; the weighting of each HICS Category within the HICS Amalgamated Scorecard; and the scoring system for the HICS Amalgamated Scorecard.

There is also a ‘HICS: Workshop’  video webinar recording for professional advisers.

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• There are 27 ‘HICS Factors’ across 5 ‘HICS Category Scorecards’

Each of the 27 HICS Factors generate a score, ranging between 1 (best) and 10 (worst).

Each of the 27 HICS Factors is attributed a weighting, which are combined to produce the 5 HICS Category Scorecards.

Each of the 5 HICS Categories generate a score, ranging between 1 (best) and 10 (worst).

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• The ‘HICS Amalgamated Scorecard’ combines all of the 27 HICS Factors and 5 HICS Categories

Each of the HICS Category Scorecards is attributed a weighting, which are combined to produce the HICS Amalgamated Scorecard.

The HICS Amalgamated Scorecards is based on a score out of 1,000 (with a low score best and a high score worst).

The HICS Amalgamated Scorecard uses colour to identify the quartile position of each issuer / counterparty.

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The colours attributed to each issuer / counterparty in the Amalgamated Scorecard are retained by the issuers / counterparties in the HICS Category Scorecards, making it possible to see at a glance how each issuer / counterparty scores in the HICS Amalgamated Scorecard.

TOP QUARTILE	2ND QUARTILE	3RD QUARTILE	BOTTOM QUARTILE

• The ‘HICS Side-by-Side View’ displays the raw data for the main UK retail structured product issuers / counterparties.
• Individual ‘HICS Reports’ are provided for each of the main UK retail structured product issuers / counterparties.
• The ‘HICS Monthly Movement’ summarises any significant changes (positive and negative) in each of the HICS Category Scorecards and the HICS Amalgamated Scorecard each month.

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Careful consideration was given to the development of HICS, the TICS Factors and HICS Categories, including the methodology, scoring and weighting and how the HICS Factors and HICS Categories interlink.

We would suggest that the HICS scoring is logical and broadly self-selecting: however, we highlight that the HICS methodology, scoring and weighting is based on our views of the metrics and the relative importance of the HICS Factors and HICS Categories in the HICS Category Scorecards and HICS Amalgamated Scorecard.

It is important that professional advisers using HICS understand what HICS is: and what HICS is not.