What is A.M. Best and Why Do Their Ratings Matter?
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Published on January 23, 2023
A.M Best is an insurance rating agency. It rates the financial strength and stability of life insurance companies. The company has been in business since 1899 and is one of the most respected agencies in the insurance industry. A.M. Best ratings are a great tool to help you determine if an insurance company is the right place for you to buy a policy. After all, Life Insurance is an investment in your family’s financial security. It’s important to make sure that you’re making that investment with a company you can trust.
A.M. Best Ratings represent the agency’s opinion of a company’s financial strength. This opinion is based on years of industry experience and regular, detailed reviews of the company. The ratings are an objective standard consumers can use to compare insurance companies.
What are all the A.M. Best Ratings?
A.M Best rates companies on their financial strength and ability to meet their obligations. Companies with high A.M Best ratings are companies that can pay out all the policies they currently hold. Companies with poor ratings might have trouble paying out benefits on their policies. Ratings can change over time.
Ratings are given a letter grade, like a report card. These grades are known as Financial Strength Ratings (FSRs). Companies graded between a B+ and A++ are considered financially-strong companies that will be able to meet their obligations. In this category, A.M best breaks its ratings down into these grades:
- A++ and A+ : Companies that score these grades are considered superior. They are very strong companies that can meet their financial obligations.
- A and A- : Earning a grade of A or A- is considered excellent. It means a company has an excellent ability to meet its financial obligations.
- B++ and B+ : A B++ or B+ is considered a very good grade. Companies that earn one of these grades have a very good ability to meet their financial obligations.
Companies that earn an FSR below a B+ are considered vulnerable. This means they might have less ability to meet their financial obligations. The lower the grade, the more vulnerable a company is considered. Vulnerable grades include:
- B and B- -: Companies that score these grades are considered in fair shape. They can meet the obligations of their current policyholders but are vulnerable to changes in economic conditions or underwriting standards.
- C++ and C+ : Companies earning this grade are considered marginal. These companies are also financially vulnerable to changes in economic conditions or underwriting standards.
- C and C- : These grades are for companies that are considered weak. They have a weak ability to meet financial obligations and are financially vulnerable to changes in economic conditions or underwriting standards.
- D : A D grade is considered poor and given to companies that might not be able to meet their current obligation. These companies are also extremely financially vulnerable to changes in economic conditions or underwriting standards.
- E : If a company earns an E, they are under what’s known as regulatory supervision. This means they aren’t currently allowed to conduct business as normal.
- F : A company that receives an F is in liquidation.
- S : An S means that the company’s ratings can’t be calculated. This is normally due to sudden changes affecting the company’s strength.
A.M Best also issues what’s known as a Long-Term Issuer Credit Rating. As the name implies, this rating specifically looks at an insurance company’s ability to pay all of its commitments in the long-term. The rating looks beyond a company’s strength today to try and predict its ability to meet all of its obligations for years to come.
Long-Term Issuer Credit Ratings range from C to AAA. Grades of BBB or higher are considered good to excellent and mean that A.M Best considers the insurance company to be in a good position to meet their financial obligations in the future. Conversely, ratings of BB or below mean that even if a company is doing well right now, A.M. best considers them vulnerable. These insurance companies may have trouble meeting obligations in the future.
Other Rating Agencies that Rate Insurance Companies
A.M. Best isn’t the only company that rates insurance companies. There are other agencies that also evaluate insurance companies.
- Fitch – Fitch was established in 1924 and assigns grades on a scale from AAA to. Like A.M.Best, the ratings reflect a company’s financial strength and ability to meet its financial obligations.
- Moody’s – Moody’s another long-established insurance rating agency. It assigns grades from AAA to C. Companies that earn below a Baa3 are considered financially weak or risky.
- Standard & Poor – Standard & Poor rates the creditworthiness of businesses. It assigns grades on a scale from AAA to D. Companies that earn grades below a BBB- are considered vulnerable.
- Comdex Score – A Comdex score is a composite of all a company’s other ratings. Scores are given on a scale from 1 to 100, and higher scores are best. A company’s score represents how it compares to other companies. So a company that scores a 90 has better ratings than 90 percent of insurance companies.
List of Life Insurance Companies with Their A.M. Best Ratings
Look up your company’s rating
| Company | AM Best |
|---|---|
| Metlife | A+ |
| Protective | A+ |
| Transamerica | A |
| AIG | A |
| Assurity | A- |
| Banner | A+ |
| Mutual of Omaha | A+ |
| North American | A+ |
| Prudential | A+ |
| SBLI | A |
| Colonial Penn | A- |
| Sagicor | A- |
| Gerber | A |
| Primerica | A+ |
| Globe | A |
| Northwestern Mutual | A++ |
| Allstate | A+ |
| State Farm | A++ |
| New York Life | A++ |
| Geico | A++ |
| Mass Mutual | A++ |
| American National | A |
| American General | A |
| 5 Star | A- |
| American Amicable | A |
| Columbian Life | A- |
| Ethos | A+ |
| Family Life | B+ |
| Farmers | A |
| Fidelity | A- |
| Foresters | A |
| Great Western | A- |
| William Penn | A+ |
| Voya | A |
| Vantis Life | A |
| USAA | A++ |
| AAA | A- |
| Guardian | A++ |
| American Continental | A |
| Bestow | A+ |
| Americo | A |
| American Memorial | A- |
| Genworth | B |
| Principal | A+ |
| Haven Life | A++ |
| John Hancock | A+ |
| Ladder Life | A- |
| Lincoln Financial | |
| Minnesota Life | |
| Midland National | |
| National Life Group | |
| National Western | |
| Nationwide | |
| Pacific Life | A+ |
| Royal Neighbors | A- |
Using A.M. Best Ratings When Choosing an Insurance Company
A strong A.M. Best rating means you’re getting a policy with strong financial backing. Ratings can help you determine the top companies and make an informed choice. Just like you might read restaurant reviews before heading to dinner, check a hotel’s rating before booking, or che