What Does an A++ Insurance Rating Mean?
Insurance companies, as well as banks and credit card companies, pay A.M. Best to rate their financial strength. A.M. Best assigns 13 possible grades, from A++ (superior) down to F (in liquidation). A rating of C++ is considered fair, while D, E and F signify problems.
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Industry Standards
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A superior ranking highlights both qualitative and quantitative characteristics well above the industry composites developed by A.M. Best. "These industry benchmarks are adjusted to reflect changes in underwriting, economic and regulatory market conditions," according A.M. Best's published methodology.
Financial Strength
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AM Best's top rating reflects its confidence in the company's ability to remain financially sound even if it were to have to make large payouts as a result of catastrophic losses such as hurricanes and tornadoes.
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Competition
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When comparing insurance companies, A.M. Best considers types of coverage sold, organizational structure of the company and number of policies written.
Methodology
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A.M. Best's methodology uses more than 100 tests for financial strength that include and go beyond typical measures such as reviewing balance sheets, debt versus surplus, unearned premium, loss occurrence, capital and diversification.
Performance
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Superior grades demonstrate a company's strong name recognition, performance in the market and ability to generate capital, as well as its ability to underwrite by accurately accounting for risks.
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