A.M. Best Insurance Ratings Explained

A. M. Best Company is one of the leading financial ratings companies for insurance. They use a basic 16-point rating system that illustrates the financial strength of an insurance company, which translates into how well that company would be able to withstand a situation in which a great number of claims must be processed in a relatively short period of time.

The Best ratings available for insurance companies are the A++ and A+ ratings. These are considered superior ratings and are reserved for companies with the most promising of financial outlooks, based on the company’s current level of profits and investment assets.

The A and A- ratings are awarded to insurance companies considered to be in excellent financial health. As with the superior rating, these companies have more available assets than projected claim outflow, and are thought to be stable sources for insurance as well as investment opportunities.

Finishing the list of “secure” insurance companies, B++ and B+ ratings indicate a good financial aspect. This means that company is probably able to withstand even turbulent financial times and capable of providing safe insurance lines to customers.

B and B- ratings are considered fair, and are given to companies that may be undergoing financial stress but are otherwise still worthy of trust. When a company is given a B rating, you can expect it to be stable while still having a great deal of room for improvement.

Insurance companies with a marginal rating are given a C++ or C+ ratings. This rating is for companies that are marginally stable but have a great deal of room for improvement. This could include companies that are suffering from high levels of customer dissatisfaction or have had failures in some areas of the company’s investment portfolio.

At the lower end of the acceptable ratings, C and C- are awarded to companies that were, perhaps, formerly secure but have suffered setbacks or losses. This might include a company that has lost a great deal in falling financial prices or that has been endangered by an unexpectedly high level of claims, such as following a major catastrophe.

Rounding out the ratings the final four categories are D for a company with a poor financial outlook, E for companies that have been put under mandatory regulatory supervision, F for companies that are undergoing liquidation, and S for companies that have been suspended from financial consideration in the ratings. These ratings should avoided for both insurance coverage and investment opportunities because they are deemed to be severe financial straits and may not offer any return on your investments or become unable pay for large claims

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