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AM Best

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A.M. Best Company, Inc., headquartered in Oldwick, New Jersey, is a rating agency designated as a Nationally Recognized Statistical Rating Organization (NRSRO) by the United States Securities and Exchange Commission[1] and the National Association of Insurance Commissioners.[2]

Founded in 1899 by Alfred M. Best in New York City, the privately held company moved to Morristown, New Jersey, in 1965, and subsequently to Oldwick, New Jersey, in 1974.[3] It also maintains offices in London and Hong Kong and a news bureau in Washington, D.C.

A.M. Best issues financial-strength ratings measuring insurance companies' ability to pay claims. It also rates financial instruments issued by insurance companies, such as bonds, notes, and securitization products.[4]

Unlike fellow NRSROs Standard & Poor's, Moody's and Fitch Ratings—all three of which issue ratings for a broad range of business sectors—A.M. Best historically has focused exclusively on the insurance marketplace.

A.M. Best created and maintains A.M. Best's Financial Suite,[5] databases of financial statement information from the annual and quarterly financial statements filed by insurers with the National Association of Insurance Commissioners. The Best's Aggregates & Averages series details both current and historical statistics on the U. S. and Canadian property/casualty and life/health industries.

Since first reporting on the insurance impact of the San Francisco earthquake in 1906, A.M. Best has covered news events that impact the insurance industry. The company publishes several popular insurance news publications including BestWeek, a weekly insurance industry newsletter with three regional editions (U.S./Canada, Europe and Asia/Pacific); Best's Review, a monthly magazine; and an online wire service called BestWire. Additionally, A.M. Best publishes an online daily news digest called BestDay — a video edition of which is available on the company’s home page.

In addition to insurance news publications, A.M. Best also publishes a series of printed and online directories of insurance professionals, the oldest and best known of which are Best's Directories of Recommended Insurance Attorneys & Adjusters.[6] Additional directories of insurance actuaries, auditors, captive managers and third-party administrators are available online at the Best’s Directories of Insurance Professionals Web site.

While the company is best known in the United States, it is becoming increasingly well known in Europe and the Pacific Rim. The company's London offices consist of A.M. Best Europe—Rating Services and A.M. Best Europe—Information Services. A.M. Best Asia-Pacific is located in Hong Kong.[7]

Financial Strength and Issuer Credit Ratings

Best's Financial Strength Ratings (FSR)[8] represent the company's assessment of an insurer's ability to meet its obligations to policyholders. The rating process involves quantitative and qualitative reviews of a company's balance sheet, operating performance and business profile, including comparisons to peers and industry standards and assessments of an insurer's operating plans, philosophy and management. The ratings formulae are proprietary.

The ratings scale includes six "Secure" ratings:

  • A++, A+ (Superior)
  • A, A- (Excellent)
  • B++, B+ (Good)

The scale also includes ten ratings for companies deemed "Vulnerable":

  • B, B- (Fair)
  • C++, C+ (Marginal)
  • C, C- (Weak)
  • D (Poor)
  • E (Under Regulatory Supervision)
  • F (In Liquidation)
  • S (Rating Suspended)

There are many companies that A.M. Best follows but does not issue a Best's Credit Rating on. These companies are designated as Not Rated (NR).

Long-Term Credit Ratings

Long-Term Credit Ratings assess the ability of an insurance company, holding company or other legal entity to meet its senior obligations. Ratings from "aa" to "ccc" sometimes are enhanced with a "+" (plus) or "-" (minus) to indicate whether the issuer is near the top or bottom of a category, and may be designated as Under Review ("u") when recent positive, negative or developing events dictate the rating may be subject to change in the near-term.

Insurance Company Issuer Credit Ratings

Investment Grade
  • aaa (Exceptional)
  • aa (Very Strong)
  • a (Strong)
  • bbb (Adequate)
Non-Investment Grade
  • bb (Fair)
  • b (Marginal)
  • ccc, cc (Weak)
  • c (Poor)
  • d (In Default)

Non-Insurance Company Issuer Credit Ratings

Investment Grade
  • aaa (Exceptional)
  • aa (Very Strong)
  • a (Strong)
  • bbb (Adequate)
Non-Investment Grade
  • bb (Speculative)
  • b (Very Speculative)
  • ccc, cc, c (Extremely Speculative)
  • d (In Default)

Short-Term Issuer Credit Ratings

Short-Term Issuer Credit Ratings assess the ability of a rated entity to meet senior financial commitments on obligations maturing in generally less than one year.

Investment Grade

  • AMB-1+ (Strongest)
  • AMB-1 (Outstanding)
  • AMB-2 (Satisfactory)
  • AMB-3 (Adequate)

Non-Investment Grade

  • AMB-4 (Speculative)
  • d (In Default)

See also

References

  1. ^ "Nationally Recognized Statistical Rating Organizations ("NRSROs")". U.S. Securities and Exchange Comission. Retrieved 25 February 2013.
  2. ^ "A.M. Best Becomes Fifth Agency Added to NAIC'S NRSRO List". National Association of Insurance Commissioners Press Release. 6 March 2006. Retrieved 25 February 2013.
  3. ^ Chronology of Events in A.M Best's History
  4. ^ "Rating Agencies: New NRSRO A.M. Best May Rate Bond Insurers". The Bond Buyer. 8 March 2005. Retrieved 25 February 2013.
  5. ^ O'Donnell, Anthony (31 March 2009). "A.M. Best Releases 2009 Best's Financial Suite—Reinsurance". Insurance & Technology. Retrieved 25 February 2013.
  6. ^ "Business Briefs - Atchely joins Birmingham, Alabama's Luckie & Co". The Birmingham News. 29 May 2009. Retrieved 25 February 2013.
  7. ^ "A.M. Best Expands Capabilities of its Hong Kong Regional Headquarters". Insurance Journal. 29 February 2003. Retrieved 25 February 2013. {{cite news}}: Check date values in: |date= (help)
  8. ^ "Understanding the A.M. Best Insurance Rating System" (PDF). Skyles Insurance Agency. Retrieved 25 February 2013.
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