A.M. Best
Encyclopedia
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
.
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. 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.
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, 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 most well-known of which are Best's Directories of Recommended Insurance Attorneys & Adjusters. 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.
The ratings scale includes six "Secure" ratings:
The scale also includes ten ratings for companies deemed "Vulnerable":
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).
Oldwick, New Jersey
Oldwick is an unincorporated area within Tewksbury Township in Hunterdon County, New Jersey, United States. The area is served as United States Postal Service ZIP Code 08858. As of the United States 2000 Census, the population for ZIP Code Tabulation Area 08858 was 177.Oldwick was formerly known as...
, is a rating agency designated as a Nationally Recognized Statistical Rating Organization
Nationally Recognized Statistical Rating Organization
A Nationally Recognized Statistical Rating Organization is a credit rating agency that issues credit ratings that the U.S. Securities and Exchange Commission permits other financial firms to use for certain regulatory purposes...
(NRSRO) by the United States Securities and Exchange Commission
United States Securities and Exchange Commission
The U.S. Securities and Exchange Commission is a federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States...
.
Founded in 1899 by Alfred M. Best
Alfred M. Best
Alfred M. Best was an American actuary, born in Caldwell, New Jersey, US.At the age of 15, Best began his career in the insurance industry as a junior clerk with the Queen Insurance Company of America in New York. He continued to work in the insurance field for various companies over the next six...
in New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
, the privately held company moved to Morristown, New Jersey
Morristown, New Jersey
Morristown is a town in Morris County, New Jersey, United States. As of the 2010 United States Census, the town population was 18,411. It is the county seat of Morris County. Morristown became characterized as "the military capital of the American Revolution" because of its strategic role in the...
, in 1965, and subsequently to Oldwick, New Jersey
Oldwick, New Jersey
Oldwick is an unincorporated area within Tewksbury Township in Hunterdon County, New Jersey, United States. The area is served as United States Postal Service ZIP Code 08858. As of the United States 2000 Census, the population for ZIP Code Tabulation Area 08858 was 177.Oldwick was formerly known as...
, in 1974. It also maintains offices in London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
and Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
and a news bureau in Washington, D.C.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
A.M. Best issues financial-strength ratings measuring insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
companies' ability to pay claims. It also rates financial instruments issued by insurance companies, such as bonds, notes, and securitization products.
Unlike fellow NRSROs Standard & Poor's
Standard & Poor's
Standard & Poor's is a United States-based financial services company. It is a division of The McGraw-Hill Companies that publishes financial research and analysis on stocks and bonds. It is well known for its stock-market indices, the US-based S&P 500, the Australian S&P/ASX 200, the Canadian...
, Moody's
Moody's
Moody's Corporation is the holding company for Moody's Analytics and Moody's Investors Service, a credit rating agency which performs international financial research and analysis on commercial and government entities. The company also ranks the credit-worthiness of borrowers using a standardized...
and Fitch Ratings
Fitch Ratings
The Fitch Group is a majority-owned subsidiary of FIMALAC, headquartered in Paris. Fitch Ratings, Fitch Solutions and Algorithmics, are part of the Fitch Group....
-- 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, 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 most well-known of which are Best's Directories of Recommended Insurance Attorneys & Adjusters. 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.
Financial Strength and Issuer Credit Ratings
Best's Financial Strength Ratings (FSR) 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.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)
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)
See also
- Standard & Poor'sStandard & Poor'sStandard & Poor's is a United States-based financial services company. It is a division of The McGraw-Hill Companies that publishes financial research and analysis on stocks and bonds. It is well known for its stock-market indices, the US-based S&P 500, the Australian S&P/ASX 200, the Canadian...
- Moody'sMoody'sMoody's Corporation is the holding company for Moody's Analytics and Moody's Investors Service, a credit rating agency which performs international financial research and analysis on commercial and government entities. The company also ranks the credit-worthiness of borrowers using a standardized...
- Fitch RatingsFitch RatingsThe Fitch Group is a majority-owned subsidiary of FIMALAC, headquartered in Paris. Fitch Ratings, Fitch Solutions and Algorithmics, are part of the Fitch Group....
- Dominion Bond Rating ServiceDominion Bond Rating ServiceDBRS is a credit rating agency headquartered in Toronto, Ontario. Founded in 1976 by its current owner and president, Walter Schroeder, it is the largest rating agency in Canada....
- Nationally Recognized Statistical Rating OrganizationNationally Recognized Statistical Rating OrganizationA Nationally Recognized Statistical Rating Organization is a credit rating agency that issues credit ratings that the U.S. Securities and Exchange Commission permits other financial firms to use for certain regulatory purposes...
- ReutersReutersReuters is a news agency headquartered in New York City. Until 2008 the Reuters news agency formed part of a British independent company, Reuters Group plc, which was also a provider of financial market data...
- Bloomberg L.P.Bloomberg L.P.Bloomberg L.P. is an American privately held financial software, media, and data company. Bloomberg makes up one third of the $16 billion global financial data market with estimated revenue of $6.9 billion. Bloomberg L.P...
- Morningstar, Inc.Morningstar, Inc.Morningstar, Inc. is an independent investment research company based in Chicago, Illinois, USA.-Businesses:Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for...