AM Best financial strength ratings explained

An AM Best financial strength rating is the rating agency's opinion of how able an insurance company is to pay its claims and other policy obligations. The scale runs from A++ (Superior) down to D (Poor), with separate letters for insurers in regulatory trouble or liquidation. For a car insurance shopper, the rating answers one question, "will this company be around and able to pay?", and nothing about price or claims service.

The financial strength rating scale

AM Best publishes the definitions in its Guide to Best's Financial Strength Ratings. Each category from A+ down to C has two notches, shown with a second plus or a minus.

AM Best also uses status designations that are not ratings:

• E: under regulatory supervision, such as a court-ordered conservation or rehabilitation, or regulatory action that limits policyholder payments.
• F: placed in liquidation by court order after a finding of insolvency.
• S: rating suspended because of a sudden event whose effect cannot yet be evaluated.
• NR: not rated, either never rated or previously rated.

Note the dividing line. AM Best's own definitions describe B and below as vulnerable to adverse changes, while the B++/B+ "Good" category and everything above it carry no such warning.

Outlooks, "under review" and other labels

A rating rarely appears alone. Look for:

• Outlook: positive, negative or stable, signaling the direction the rating may move over the next few years.
• Under review: shown with a "u" modifier. It means an event, such as an acquisition or a large loss, has put the rating in play, with positive, negative or developing implications.
• Issuer credit rating (ICR): a separate long-term rating on a lowercase scale ("aa", "a+" and so on). It addresses creditworthiness more broadly; for a policyholder, the financial strength rating is the one to read.
• Financial Size Category (FSC): a Roman numeral from I (smallest) to XV (largest) indicating the company's size. It is not part of the rating.

AM Best's guidance on proper use of its ratings (September 2025) asks companies to show the rating with a date and to point readers to ambest.com for the latest rating, because ratings change.

How to look up a rating

1. Find the legal name of the company on your policy or quote. Large brands are groups of many companies, and a quote may come from a subsidiary with a different name. The declarations page names the issuing company.
2. Search AM Best's website. Enter the company name in the "Search for a Company" box on ambest.com. Ratings are free to view; AM Best notes that some information may require free registration.
3. Match the exact company. Check the city and the AM Best number or NAIC company code if shown, so you are not reading a sister company's rating.
4. Read the rating, outlook and date. A recent downgrade or a negative outlook is worth more attention than the letter alone.
5. Note the rating in your own records with today's date, especially if you are comparing several insurers in the compare auto insurers side by side.

Many insurers also show their AM Best rating on their websites. That is fine as a starting point, but confirm it on AM Best's site, since a company's marketing page can lag behind a rating change.

What a rating does and does not tell you

An AM Best rating is a forward-looking opinion about financial strength, based on AM Best's analysis of balance sheet strength, operating performance, business profile and enterprise risk management. AM Best stresses that it is not a recommendation to buy or cancel any policy and is not a guarantee.

It does not measure:

• Price. Highly rated companies are not necessarily cheaper or more expensive.
• Claims service. For that, look at complaint data and customer satisfaction studies. See The NAIC complaint index: how to look up an insurer and J.D. Power auto insurance studies explained.
• Coverage quality. Two A-rated insurers can sell quite different policies.

Using ratings when you shop for car insurance

Auto insurance is short-term: most policies run six or twelve months, and claims usually settle within a year or two. That makes a car insurer's financial strength less critical than for, say, a life insurer you will rely on for decades. It still matters, because a failed insurer leaves you scrambling for new coverage and waiting on a state guaranty fund for open claims, with payment caps. See what happens if your car insurer goes insolvent.

A practical approach:

• A++ to A-: the rating raises no concerns; compare on price, coverage and service.
• B++ or B+: acceptable to many buyers, but check the outlook and recent history.
• B or lower, or E or F: ask why, check the state insurance department, and consider whether a cheaper premium is worth the added risk.
• Not rated by AM Best: common for small regional insurers and some newer companies. Check whether another agency rates them, and confirm the company is licensed in your state.

Other rating agencies

S&P Global Ratings, Moody's and Fitch also rate insurers' financial strength on their own scales, mostly for large companies. Demotech rates many smaller regional property insurers, particularly in Florida. A company citing a rating should tell you which agency issued it; "A Exceptional" from one agency is not the same scale as "A" from AM Best.

Ratings are one input. For the full checklist, including licensing, complaints and how a company sells, see how to research a car insurance company before you buy.

Key takeaways

• AM Best's financial strength ratings run from A++ (Superior) to D (Poor); E and F mean regulatory supervision and liquidation.
• AM Best describes ratings of B and below as vulnerable to adverse changes in underwriting and economic conditions.
• Look up the exact company on your policy at ambest.com; viewing ratings is free, though some details may require free registration.
• A rating measures ability to pay claims, not price, service or coverage quality.
• Check the outlook and any "under review" flag, and date your notes, because ratings change.