What Do AM Best Insurance Ratings Mean?

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You’ll often find AM Best ratings displayed on an insurer’s company webpage, and you might see these ratings cited in car and home insurance reviews. But what do AM Best insurance ratings actually mean? Should you rely on them when deciding where to buy your insurance coverage? We’ll dive into what these ratings are all about, the company behind them, and whether they’re worthy of your trust. 

Key Takeaways

  • AM Best’s credit ratings tell you an insurance company’s financial stability.
  • The rating process considers factors such as an insurance company's business profile, balance sheet and operating performance, and how it measures up to its competitors.
  • Insurance companies take AM Best ratings seriously because they know current and potential clients and investors use these ratings to assess their financial strength.

What Is AM Best?

AM Best has been in business since 1899, providing policyholders a way to verify the financial strength of insurance companies. The agency offers in-depth financial analysis reports to help people judge an insurer’s creditworthiness. It gathers comprehensive information about insurance companies and distills it into a simple letter grade. It is, in a sense, your insurance company's report card. You can use this information to help you make an educated buying decision for your insurance needs. 

AM Best rates insurance companies in areas like: 

How AM Best Insurance Ratings Work

AM Best is different from other rating agencies in that it focuses exclusively on the insurance industry. The rating process considers factors such as an insurance company's business profile, balance sheet, and operating performance, as well as how it measures up to its competitors.

AM Best issues four types of “Best Credit Ratings,” each of which assesses a different aspect of a company’s financial strength and capacity to meet ongoing financial obligations. It’s worth paying attention to these ratings because they’re a good benchmark of how successfully a company might weather tough economic conditions and other financial challenges.

Insurance Company Ratings Explained

One of the “Best Credit Ratings” is the “Best’s Financial Strength Rating” (FSR). It sums up AM Best’s independent opinion of an insurer’s financial soundness and ability to make good on its insurance obligations, such as paying out claims. When you check AM Best’s insurance ratings to confirm the financial stability of an insurance company, you’ll see one of these FSRs:

Rating Categories Rating Symbols
Superior A+, A++
Excellent A, A-
Good B+, B++
Fair B, B-
Marginal C+, C++
Weak C, C-
Poor D

Rating symbols are the scores used to represent each rating category. They include pluses and minuses, which Best calls “rating notches,” to indicate minor variations in financial strength within each category. For example, say AM Best rates two different insurers as “Superior.” That means the agency believes both have a superior ability to meet their financial obligations, but one insurer may receive an A+, while the other may be deemed slightly more impressive and earn an A++.


AM Best provides Best’s Credit Ratings and company information for free to registered AM Best members. Registration is also free—you just need to provide your name, email, and password. If you have questions or need assistance, you can contact AM Best’s customer support team at 908-439-2200 x5742.

What Do AM Best Ratings Mean to Insurance Companies?

Insurance companies take the rating information issued by AM Best very seriously because they know current and potential clients and investors use these ratings to assess a company’s financial strength. Financially stable companies with positive outlooks engender confidence in not only policyholders and investors, but also shareholders and employees—all of whom are integral to an insurer’s growth, profitability, and long-term stability. 

AM Best ratings are generally updated annually, as well as when significant developments might affect those ratings. Ratings can change based on an organization’s:

  • Financial health, including underwriting, credit, market risks, and more.
  • Comparison to peers, proprietary benchmarks, and industry standards.
  • Operating plans, risk appetite, support of a parent and/or affiliates, management, and more.


An AM Best rating is also important because it’s AM Best’s independent opinion on how it expects the insurance company to perform in the near future. The outlook can be positive, negative, or stable.

Criticism of AM Best Ratings

Despite its generally good track record, AM Best, along with other rating agencies (such as Fitch, Moody’s, and Standard & Poor’s), came under heavy criticism for overly positive assessments of the insurance holding company American International Group (AIG) during the financial crisis in 2008. The survival of dozens of insurance companies owned by AIG was threatened by huge losses at AIG Financial Products, the company’s derivative trading subsidiary. AM Best and other rating agencies were caught by surprise and criticized for not realizing sooner how risky AIG’s trading operations were. In response, AM Best downgraded the company’s financial strength rating from A++ to A+. The federal government bailed out AIG for $182 billion, which was repaid by the end of February 2013. 

Insurance News Publications

AM Best publishes several insurance news products, including Best's Insurance News & Analysis, which provides worldwide insurance news. It includes BestDay, an online news digest, and Bestweek, a weekly insurance industry newsletter. There’s also BestWeek Live (weekly online video program), Best's Review (monthly magazine), AMBestTV (free streaming video service), AM Best Webinars (events from industry leaders), and AMBestAudio (podcast service).

AM Best Analytical Products

In addition to rating services and insurance news publications, AM Best also offers a comprehensive collection of analytical products to its members for an in-depth look at the insurance industry:

  • Best’s Insurance Reports: In-depth analytical reports on thousands of insurance companies, reinsurers, and other groups throughout the United States, Canada, and worldwide.
  • Best’s Credit Reports: Credit reports for individual insurers that contain financial analysis, in-depth commentary, and more. Best’s Credit Reports can be purchased individually or as part of a collection.
  • Best’s Library Center: A useful online resource for researching insurance information, the AM Best Library Center is available to public and academic libraries.
  • Best’s Capital Adequacy Ratio Model—P/C, US: A desktop application that gives you access to the same model AM Best uses to calculate Capital Adequacy Ratio scores for single and group insurance companies in the property/casualty sectors in the United States.
  • Best’s Capital Adequacy Ratio Model—Universal: An Excel-based tool that gives you access to the same model used by AM Best to calculate the Capital Adequacy Ratio scores for single and group insurance companies in the life and non-life sectors in areas outside of the U.S. and Canada. 


AM Best’s Product Directory page lists all of its resources, reports, programs, and more.

The Bottom Line

AM Best is a long-standing independent insurance rating agency. Although it has made mistakes in the past, its rigorous analysis of an insurer’s financial strength can help prospective customers and investors make informed decisions about which insurer to choose. Consumers and policyholders can generally be confident in AM Best’s assessment of an insurance company’s financial health.

That said, AM Best is one of five independent agencies that rate an insurance company’s financial strength—along with Moody’s, Fitch, Kroll Bond Rating Agency (KBRA), and Standard & Poor’s. These rating agencies don’t always agree in their assessments of a particular insurer, so in addition to comparing insurance coverage, it’s essential to consider ratings from at least two agencies before making your final decision about which insurance to buy. That way, you can find the best company for your insurance needs.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
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  2. AM Best. "Industry Centers."

  3. AM Best. "AM Best Frequently Asked Questions."

  4. AM Best. "Why a Best's Financial Strength Rating Is Important."

  5. AM Best. "Guide to Best's Financial Strength Ratings - (FSR)."

  6. AM Best. "Contact."

  7. AM Best. "Best's Credit Rating Methodology," pages 1 & 8.

  8. AM Best. "Best's Credit Rating Methodology," pages 3 & 8.

  9. AM Best. "Understanding Best's Credit Ratings," page 16.

  10. Procedia Economics and Finance. "The Rating of Insurance Companies During the Financial Crisis," page 1496.

  11. AM Best. "A.M. Best Downgrades Ratings of American International Group, Inc. and Life Subsidiaries."

  12. U.S. Treasury Department. "$182 Billion Commitment to AIG During Financial Crisis Now Fully Recovered After Pricing of $18.0 Billion Treasury Common Stock Sale."

  13. AM Best. "Product Directory."

  14. Insurance Information Institute. "How To Assess the Financial Strength of an Insurance Company."

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