Effective April 18, 2011
Read Guide to Best's Financial Strength Ratings for complete details on the rating scale and definitions.
Also see sections on
Debt and Issuer Credit Ratings.
A Best's Financial Strength Rating is an independent opinion of an insurer's financial strength and ability to meet its ongoing insurance policy and contract obligations. It is based on a comprehensive quantitative and qualitative evaluation of a company's balance sheet strength, operating performance and business profile.
Our rating process incorporates specific methodologies designed to address the Property/Casualty (Non-Life) and Life/Health/HMO industry segments, as well as Non-U.S. insurance companies. A complete list of Best's Credit Rating Methodologies is available.
A Best's FSR opinion addresses the relative ability of an insurer to meet its ongoing insurance obligations. It is not a warranty of a company's financial strength and ability to meet its obligations to policyholders. View our Important Notice for complete details.
A.M. Best's rating system has a proven track record in indicating insurance companies that may, over time, encounter financial difficulties (see Best's Impairment Studies: Life/Health, Property/Casualty). As such, a Best's FSR is recognized worldwide as the benchmark for assessing and comparing insurers' financial strength. Such a benchmark is increasingly important to an international market that looks for a strong indication of stability in the face of widespread deregulation, mergers, acquisitions and other dynamic factors.
Why a Best's Financial Strength Rating Is Important
For insurance companies, a Best's FSR is a strategic tool that can enhance consumers' confidence in the organization's stability, as well as its attractiveness to investors. A rating also enhances an insurer's credibility with reinsurers - a valuable resource, particularly for insurers entering new markets.
Insurance professionals depend on a Best's FSR to assess the creditworthiness of an insurer's operations, to evaluate prospective reinsurance accounts, to compare company performance and financial condition, and more. A rating can influence an agent's selection of plans to market.
A rating also is an important factor in the consumer's decision-making process to purchase insurance. Today's insurance consumers are well aware of how regional, political and economic instabilities can affect a marginal company. A Best's FSR can provide consumers with the information necessary for an educated buying decision. In addition, A.M. Best now offers a special AMB Credit Report - Consumer.
A.M. Best Company is committed to maintaining Best's FSRs as the definitive source for information on the financial condition and operating performance of insurance companies worldwide.
Understanding Best's Financial Strength Ratings
A Best's FSR can be assigned to an insurance company on an interactive or non-interactive basis. In both cases, the rating scale and descriptors are:
A++, A+ (Superior)
B, B- (Fair)
A, A- (Excellent)
C++, C+ (Marginal)
B++, B+ (Good)
C, C- (Weak)
E (Under Regulatory Supervision)
F (In Liquidation)
Rating Modifiers may be assigned to Financial Strength Ratings.
Modifier Descriptor Definition
Indicates the rating may change in the near term, typically within six months. Generally is event driven, with positive, negative or developing implications.
Indicates rating assigned to insurer that chose not to participate in A.M. Best's interactive rating process (discontinued in 2010).
Indicates rating assigned to a Lloyd's syndicate.
In addition, Affiliation Codes may be added to identify companies whose assigned ratings include consideration of a group ("g"), pooling ("p") or reinsurance ("r") affiliation with other insurers.
Ratings from A to C also may be enhanced with a "++" (double plus), "+" (plus) or "-" (minus) to indicate whether credit quality is near the top or bottom of a category.
An Outlook is assigned to an interactive FSR to indicate its potential direction over an intermediate term, generally defined as 12 to 36 months. An Outlook can be:
Indicates possible rating upgrade due to favorable financial/market trends relative to the current rating level.
Indicates possible rating downgrade due to unfavorable financial/market trends relative to the current rating level.
Indicates low likelihood of a rating change due to stable financial/market trends.
To enhance the usefulness of ratings, A.M. Best assigns each rated (A++ through D) insurance company a Financial Size Category (FSC). The FSC is based on adjusted policyholders' surplus (PHS) and is designed to provide a convenient indicator of the size of a company in terms of its statutory surplus and related accounts.
Many insurance buyers only want to consider buying insurance coverage from companies that they believe have sufficient financial capacity to provide the necessary policy limits to insure their risks. Although companies utilize reinsurance to reduce their net retention on the policy limits they underwrite, many buyers still feel more comfortable buying from companies perceived to have greater financial capacity.
Financial Size Category
Class Adj. PHS ($ Millions) Class Adj. PHS ($ Millions)
I-Less than 1
II-1 to 2
III-2 to 5
IV-5 to 10
V-10 to 25
VI-25 to 50
VII-50 to 100
VIII-100 to 250
IX-250 to 500
X-500 to 750
XI-750 to 1,000
XII-1,000 to 1,250
XIII-1,250 to 1,500
XIV-1,500 to 2,000
XV-2,000 or greater
Not Rated Designation
The Not Rated (NR) designation is assigned to companies that are not rated by A.M. Best.
Usage of Best's Ratings
Best's Credit Ratings are proprietary and may not be reproduced without permission from A.M. Best. A company assigned a Best's Credit Rating should review the Guide to Proper Use, which outlines the acceptable parameters of the use of these ratings.
All queries regarding the use of proprietary information or to obtain a licensing agreement or a letter of consent should be directed to:
A.M. Best Company, Office of Intellectual Property, Ambest Road, Oldwick, New Jersey 08858
Phone: 908-439-2200, extension 5644 or e-mail James.Peavy@ambest.com.
View our Legal and Licensing information for details on the use of A.M. Best trademarks, logos and service marks.
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