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What is A.M. Best?

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A.M. Best is a credit rating agency that rates insurance companies’ ability to meet their financial commitments to customers.

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Amanda Shih

Amanda Shih

Editor & Licensed Insurance Expert

Amanda Shih is an insurance editor and licensed Life, Health, and Disability agent at Policygenius in New York City. Her work has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power.

Updated October 14, 2021|2 min read

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When you research life insurance companies at Policygenius, we provide three third-party ratings to help you evaluate companies: the A.M. Best Rating, Better Business Bureau (BBB) Rating, and J.D. Power Rating.

A.M. Best rates a company’s financial health while J.D. Power and BBB both measure customer satisfaction.

A.M. Best is a global credit rating agency that focuses exclusively on the insurance industry; they score insurance companies based on financial strength, i.e., whether they can survive unstable economic situations. The A.M. Best rating scale ranges from A++ (Superior) to D (Poor).

Key Takeaways

  • A.M. Best grades the long-term financial stability of insurance companies 

  • Ratings reflect whether an insurer can reliably pay claims and other debts based on its cash on hand, market position, risk management, and other factors 

  • A financially stable insurer offers peace of mind that the company can withstand stock market volatility and fulfill its promises to customers

Why does a life insurance company’s A.M. Best rating matter?

Life insurance is financial protection for your family for decades in the future. Once you’ve found a company that suits your needs, a financial rating offers assurance that the insurer can weather market downturns and fulfill its monetary obligations far into the future. 

A.M. Best is a trustworthy source for gauging your provider’s financial strength. Policygenius only offers policies from insurance companies that have an A.M. Best rating of A- (Excellent) or better. However, even if your insurer goes bankrupt, there are regulations to ensure your policy is honored.

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A.M. Best insurance ratings for the biggest life insurance companies

Below are the A.M. Best ratings for 22 of the largest life insurance companies.

LIFE INSURANCE COMPANYA.M. BEST RATING
AIGA
AXA EquitableA
BrighthouseA
Globe LifeA
Guardian LifeA++
John HancockA+
Lincoln FinancialA+
MassMutualA++
MetLife (Metropolitan Group)A+
Minnesota Life (Securian)A+
Mutual of OmahaA+
NationwideA+
New York LifeA++
Northwestern MutualA++
Pacific LifeA+
PrimericaA+
PrudentialA+
Transamerica (AEGON)A
State FarmA++
SymetraA
VoyaA

How A.M. Best determines its ratings

A.M. Best assigns insurers a letter grade, with or without plus or minus signs, which the company calls notches. 

To set a company's rating, A.M. Best compiles and analyzes public and proprietary financial information and data, including:

  • Balance sheet strength:  A company’s cash on hand (liquidity), how efficiently the company generates earnings (quality of capital), quality and appropriateness of reinsurance programs, and more

  • Business profile: Including market position, management quality, and distribution channels for the company’s products

  • Enterprise risk management (ERM): Analysis of risk management framework and capability relative to the insurer’s risk profile

  • Operating performance: Stability, diversity, and sustainability of the company’s earnings sources, plus relationship between earnings and liability

Insurance companies that receive high ratings generally have strong and predictable cash flows; competitive advantages in branding and customer experience; and diverse earnings and revenue streams, among other factors.

A committee determines the final A.M. Best rating to ensure consistency and objectivity. A.M. Best regularly reviews and updates the ratings as new data becomes available. 

A.M. Best credit ratings and definitions

The table below summarizes how A.M. Best defines each of the grades on their ratings scale.

Each rating from A to C also includes notches — either a minus sign or a second plus sign — which reflect some variation in financial strength within that grade level. [1] For example, a "Good" company likely to meet their financial obligations that’s especially strong in the category might receive a B++ rather than a B+.

Rating categoryRating rangeCategory definition
SuperiorA++ to A+Superior ability to meet ongoing insurance obligations
ExcellentA to A-Excellent ability to meet ongoing insurance obligations
GoodB++ to B+Good ability to meet ongoing insurance obligations
FairB to B-Fair ability to meet ongoing insurance obligations; vulnerable to adverse changes in underwriting and economic conditions
MarginalC++ to C+Marginal ability to meet ongoing insurance obligations; vulnerable to adverse changes in underwriting and economic conditions
WeakC to C-Weak ability to meet ongoing insurance obligations; very vulnerable to adverse changes in underwriting and economic conditions
PoorDPoor ability to meet ongoing insurance obligations; extremely vulnerable to adverse changes in underwriting and economic conditions

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A.M. Best’s insurance rating system is an easy and trustworthy way to evaluate your life insurance provider’s financial health. However, financial stability is just one part of choosing the right life insurance company. An independent insurance broker like Policygenius can help you choose a provider that suits all of your needs.

Frequently asked questions

What is an A.M. Best rating for insurance companies?

A.M. Best grades are credit ratings for insurance companies based on their financial stability, including, most importantly, their ability to pay out claims to customers.

What is the A.M. Best rating scale?

Ratings are given on a graded scale of A++ to D, where A++ is Superior and D is Poor.

What is A.M. Best’s rating methodology?

A committee at A.M. Best evaluates public and proprietary data on a company’s stability, distribution, liquidity, risk management, and other factors to set ratings.

Why is a life insurance company’s A.M. Best rating important?

A life insurance company with a strong financial rating offers extra assurance that it can withstand economic downturns and fulfill its promises to customers.

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