A.M Best
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A.M Best is one of five credit rating agencies (others being: Dun & Bradstreet (D&B), Fitch, Moody’s & Standard & Poor’s) that give corporate credit ratings. Unlike the other rating agencies which issue ratings for all business sectors A.M Best focuses it’s attention on the insurance sector. It was created in 1899 by Alfred M. Best.
A.M Best’s Ratings Scale
The ratings scale for A.M Best can be found below.
A.M Best Insurance Ratings
A.M best uses something called the Financial Strength Ratings to measure an insurer’s ability to meet its obligations to policyholders. These are given letter ratings between A & S. There are six secure ratings & ten unsecured ratings. Below is a table of each of these ratings:
Financial Strength Ratings (FSR)
| Secure or Insecure | Letter Rating | What This Means |
|---|---|---|
| Secure | ++, A+ | Superior |
| Secure | A, A- | Excellent |
| Secure | B++, B+ | Good |
| Insecure | B, B- | Fair |
| Insecure | C++, C+ | Marginal |
| Insecure | C, C- | Weak |
| Insecure | E | Under Regulatory Supervision |
| Insecure | F | In Liquidation |
| Insecure | S | Rating Suspended |
If A.M best does not issue a credit rating then they have an NR (Not Rated) applied to them.
Long Term Credit Ratings
These long term ratings are used to assess an insurers long term ability to meet it’s senior obligations (usually over a period of more than twelve months). The rating system is as follows:
| Investment Grade Or Non Investment Grade | Letter Rating | What This Means |
|---|---|---|
| Investment Grade | AAA | Exceptional |
| Investment Grade | AA | Very Strong |
| Investment Grade | A | Strong |
| Investment Grade | BBB | Adequate |
| Non-Investment Grade | BB | Fair |
| Non-Investment Grade | B | Marginal |
| Non-Investment Grade | CCC, CC | Weak |
| Non-Investment Grade | C | Poor |
| Non-Investment Grade | D | In Default |
These ratings are then enhanced with + (plus) or – (minus) signs to indicate wether a company is near the top or bottom of a specific letter rating. If a company is under review they will be given a U, this is usually when there has either been some positive or negative recent news which may affect their letter rating.
Short-Term Credit Ratings
A.M Best also use short term credit ratings which assess an insurers short term ability to meet it’s senior obligations. The rating system is as follows:
| Investment Grade Or Non Investment Grade | Letter Rating | What This Means |
|---|---|---|
| Investment Grade | AMB-1+ | Strongest |
| Investment Grade | AMB-1 | Outstanding |
| Investment Grade | AMB-2 | Satisfactory |
| Investment Grade | AMB-3 | Adequate |
| Non-Investment Grade | AMB-4 | Speculative |
| Non-Investment Grade | D | In Default |
A.M. Best’s Financial Suite
A.M best is also responsible for a financial suite which it created and maintains. It includes a large database of financial statement information which it collects from quarterly and annual financial statements filed by insurers with the National Association of Insurance Commissioners.