What is A.M. Best?

Understanding how life insurance companies are rated.

When you are researching the best life insurance companies at Policygenius, we provide three third-party ratings to help you evaluate companies:

  • J.D. Power Rating
  • BBB Rating
  • A.M. Best Rating

J.D. Power and BBB both rank customer satisfaction, while A.M. Best provides a financial health rating.

A.M. Best, in 1899, is a global credit rating agency that focuses exclusively on the insurance industry; their scores address an insurer’s ability to meet its financial obligations, they are widely respected throughout the industry.

Policygenius only offers policies from insurance companies that have at least an “excellent” (A-) financial rating.

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Why a life insurance company’s financial health is important

When you buy life insurance, you are purchasing a policy that offer protection for your family for decades to come. Term life insurance lasts for a specified term, usually 10 to 30 years; permanent life insurance policies will last for the rest of your life.

This could be many decades, and it’s important to choose a company that you’re confident will be around and able to pay claims for that long.

While A.M. Best ratings are helpful, and you certainly want to choose a financially-stable company, it’s also important to know that there are also regulatory safeguards to ensure claims get paid even if a life insurance company goes bankrupt.

How A.M. Best determines its ratings

A.M. Best’s ratings consist of a letter grade, with or without plus or minus signs, which they call notches, given to each insurance company based on its ability to meet its ongoing financial obligations.

The credit ratings are based on a rigorous process that includes: Compiling public and proprietary financial information and data Performing qualitative and quantitative analysis Determining the A.M. Best credit rating Disseminating the rating Monitoring the rating

Examples of the public and proprietary financial information and data that is evaluated include:

  • Balance sheet strength — includes liquidity, quality of capital, quality and appropriateness of reinsurance programs, and more
  • Operating performance — includes focus on the stability, diversity, sustainability of the company’s earnings sources, plus relationship between earnings and liability
  • Business profile — includes market position, management quality, distribution channels, and more
  • Enterprise risk management (ERM)— includes analysis of risk management framework and capability relative to the insurer’s risk profile

The score is determined by a committee that ensures rating consistency and integrity.

Read more about how A.M. Best determines its credit ratings.

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A.M. Best credit ratings and definitions

The table below is a simplification of the A.M. Best ratings guide.

Rating categoryRating symbols and notchesCategory definitions, per A.M. Best
SuperiorA++ to A+“Assigned to insurance companies that have, in our opinion, a superior ability to meet their ongoing insurance obligations.”
ExcellentA to A-“Assigned to insurance companies that have, in our opinion, an excellent ability to meet their ongoing insurance obligations.”
GoodB++ to B+“Assigned to insurance companies that have, in our opinion, a good ability to meet their ongoing insurance obligations.”
FairB to B-“Assigned to insurance companies that have, in our opinion, a fair ability to meet their ongoing insurance obligations. Financial strength is vulnerable to adverse changes in underwriting and economic conditions.”
MarginalC++ to C+“Assigned to insurance companies that have, in our opinion, a marginal ability to meet their ongoing insurance obligations. Financial strength is vulnerable to adverse changes in underwriting and economic conditions.”
WeakC to C-“Assigned to insurance companies that have, in our opinion, a weak ability to meet their ongoing insurance obligations. Financial strength is very vulnerable to adverse changes in underwriting and economic conditions.”
PoorD“Assigned to insurance companies that have, in our opinion, a poor ability to meet their ongoing insurance obligations. Financial strength is extremely vulnerable to adverse changes in underwriting and economic conditions.”

Read the full A.M. Best ratings guide.

A.M. Best credit ratings for the best life insurance companies

COMPANYA.M. BEST RATING
AIGA
AXA EquitableA+
Banner LifeA+
Guardian LifeA++
John HancockA+
Lincoln FinancialA+
MassMutualA++
MetLife (via Brighthouse)A+
Minnesota Life (Securian)A+
Mutual of OmahaA+
NationwideA+
New York LifeA++
Northwestern MutualA++
Pacific LifeA+
PrimericaA+
Principal FinancialA+
ProtectiveA+
PrudentialA+
SBLIA
State FarmA++
TransamericaA+
VoyaA+

Further reading

Understanding how life insurance rates change by age

The cost of life insurance can increase by as much as 12% each year you put it off. See real life examples here.

Read

How does the underwriting process work?

Life insurance rates are set largely based on the results of the underwriting process. Find out what exactly carriers look for.

Read

Should you pay my life insurance premiums annually or monthly?

How often you pay your life insurance premiums can have a big impact on how much you spend on your policy.

Read

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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