A.M. Best Ratings Explained
A comprehensive guide to understanding the importance of A.M. Best ratings explained for insurance consumers and making informed coverage decisions. Learn how A.M. Best, a leading rating agency, evaluates the financial strength and creditworthiness of insurance companies. Discover the meaning behind each rating and how it can impact your insurance choices.
Free Car Insurance Comparison
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Laura Walker
Former Licensed Agent
Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...
Former Licensed Agent
UPDATED: May 28, 2023
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.
UPDATED: May 28, 2023
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
Welcome to our comprehensive guide on A.M. Best Ratings Explained, where we delve into the intricacies of insurance company ratings. Understanding the significance of A.M. Best ratings is crucial when making informed insurance decisions. In this article, we cover key topics such as how A.M. Best evaluates financial strength, the meaning behind different ratings, and why ratings can change over time.
We also address what to do if a company lacks a rating and provide a persuasive call-to-action for users to enter their zip code and compare rates from top insurance providers. By accessing our free quote tool, you can ensure you’re choosing the best insurance coverage tailored to your needs. Let’s dive into the world of A.M. Best ratings and empower yourself to make confident insurance choices.
What do A.M. Best’s Letter Gradations mean?
| A++ and A+ | Superior | Companies with either of these ratings are among the top-rated in the industry. |
| A and A- | Excellent | These companies show a high degree of stability and a positive long-term outlook. |
| B++ and B+ | Good | These companies are stable but have room for improvement. The long-term outlook may be unsure. |
| B and B- | Fair | While currently stable, these companies have a lot of room for financial improvement. Companies rated below a B+ may not be the best choices for long-term insurance policies but may be suitable for short-term policies such as car insurance. |
| C++ and C+ | Marginal | Indicates that the company is going through some sort of financial turmoil. Consumer investment should only be made with extreme caution. Investors may be more interested in this rating because it shows the potential for future gains. |
| C and C- | Weak | Indicates a company that is going through financial problems of one sort or another. Not a good choice for purchasing an insurance policy. |
| D | Poor | This company has suffered some sort of major financial stress and is currently on shaky financial ground. Companies with a rating of D may not be suitable for insurance purchases or long-term investments. |
| E | Under regulatory supervision | Indicates a company that is being investigated or administrated by an outside agency. |
| F | In liquidation | Indicates a company that is being liquidated to pay debts. An F-rated company is probably not allowed to sell insurance products, and would not be a wise investment. |
| S | Suspended | This company, for whatever reason, is no longer accepting new customers or investments. |
Compare The Best Insurance Quotes In The Country
Compare quotes from the top insurance companies and save!
Secured with SHA-256 Encryption
What does it mean if an insurance carrier doesn’t have a rating?
Just because you cannot find a rating for any particular company from this rating agency, do not assume that the company is insolvent or even in poor financial health. There are many reasons why a rating may not be available, including the company is a subsidiary of a larger firm, lack of current information during the rating update, or company changes in name or ownership.
Other major rating agencies may have insight into the performance of a specific company; you can also turn to the BBB Business Profile of a particular insurance provider. This could be a good indicator of whether a provider will have the ability and financial strength to sustain its ongoing insurance operations, provide insurance coverage, and fulfilling its insurance obligations. You can look for signs of poor operating performance or financial performance.
Why do ratings change often?
Ratings for insurance have to be updated frequently in order to be kept up to date. Companies that have less than perfect ratings but which are known to be going through restructuring, selling portions of the company, or other financial transactions may be slated for a rating upgrade soon. It is not unusual for a rating to drop during a tumultuous economic season, and such temporary downgrades seldom last more than one or two rating periods.
<!–
–>
Frequently Asked Questions
What is A.M. Best?
A.M. Best is a credit rating agency that specializes in evaluating the financial strength and creditworthiness of insurance companies.
What do A.M. Best ratings measure?
A.M. Best ratings measure the financial strength and creditworthiness of insurance companies. These ratings are intended to help consumers, investors, and other stakeholders make informed decisions about which insurance companies to do business with.
How are A.M. Best ratings assigned?
A.M. Best ratings are assigned based on a rigorous evaluation of an insurance company’s financial strength, operating performance, and business profile. A.M. Best analysts review an insurance company’s financial statements, regulatory filings, and other relevant information to assess its ability to pay claims and meet its obligations to policyholders.
What do the A.M. Best ratings mean?
A.M. Best ratings range from A++ (Superior) to F (In Liquidation). Here’s what each rating means:
- A++ (Superior): Assigned to companies that have a superior ability to meet their ongoing insurance obligations.
- A+ (Superior): Assigned to companies that have a strong ability to meet their ongoing insurance obligations.
- A (Excellent): Assigned to companies that have an excellent ability to meet their ongoing insurance obligations.
- A- (Excellent): Assigned to companies that have a good ability to meet their ongoing insurance obligations.
- B++ (Good): Assigned to companies that have a good ability to meet their ongoing insurance obligations.
- B+ (Good): Assigned to companies that have a fair ability to meet their ongoing insurance obligations.
- B (Fair): Assigned to companies that have a marginal ability to meet their ongoing insurance obligations.
- C++ (Marginal): Assigned to companies that have a weak ability to meet their ongoing insurance obligations.
- C+ (Marginal): Assigned to companies that have a very weak ability to meet their ongoing insurance obligations.
- C (Weak): Assigned to companies that have a poor ability to meet their ongoing insurance obligations.
- D (Poor): Assigned to companies that are under regulatory supervision or have been placed in rehabilitation.
- E (Under Regulatory Supervision): Assigned to companies that are being closely monitored by regulators.
- F (In Liquidation): Assigned to companies that are in the process of being liquidated or dissolved.
Are A.M. Best ratings the only ratings that matter?
No, A.M. Best ratings are just one of several ratings that consumers and investors can consider when evaluating insurance companies. Other important ratings agencies include Standard & Poor’s, Moody’s, and Fitch.
Can an insurance company’s A.M. Best rating change over time?
Yes, an insurance company’s A.M. Best rating can change over time as its financial strength, operating performance, and business profile change. It’s important to regularly monitor an insurance company’s rating to ensure that it remains strong and stable.
Compare The Best Insurance Quotes In The Country
Compare quotes from the top insurance companies and save!
Secured with SHA-256 Encryption
Laura Walker
Former Licensed Agent
Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...
Former Licensed Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.