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What are A.M. Best ratings?

A.M. Best is a rating agency that reports on the financial strength of insurance companies. Learn why life insurance ratings matter and how A.M. Best determines stability.

When shopping for life insurance, you’ll frequently see companies or agencies refer to the A.M. Best rating of the insurer issuing the policy. The rating of the issuer of your policy can be just as important a factor as the amount of coverage you buy, the term length of a policy, and how much you’re paying. Suffice to say, you should pay close attention to what the rating is.

These third-party ratings agencies are evaluating life insurance carriers on the nuts and bolts of their financial strength. Using varying degrees of analytical rigor, ratings agencies evaluate how well-funded an insurance carrier is, how much risk it carries, and its operating performance. Each ratings agency has a different formula.

Ratings represent the opinion of the rating agency of the financial strength and ability to meet contractual obligations of the company being rated, based on the rating agency’s independent analysis. A rating is not a guarantee of financial strength, but it can be considered an indicator.

While there are several independent rating agencies out there, A.M. Best is one of the most touted and respected in the life insurance industry. A.M. Best. stands out among other rating agencies not only for its longevity but for its specialization: It is the only ratings agency that solely rates insurance.

Why life insurance company ratings matter

Before we talk specifically about A.M. Best, it’s important to understand why you should care about life insurance company ratings. If you’re like me, you probably scour Amazon reviews before buying a big-ticket item and TripAdvisor reviews before making those summer vacation plans. Information is power. And that is certainly true in the insurance world. You wouldn’t want to make an important financial decision such as purchasing life insurance to help protect your family without evaluating the company issuing the policy.

Life insurance companies receive ratings from independent agencies based on their assessments of the insurer’s financial strength and claims-paying ability. A life insurance policy is only as good as the paper it’s written on. You should choose a life insurance company that’s well respected and has received reputable ratings.

The higher the rating, the higher the rating agency’s assessment that the insurer will be around to pay out the policy to your beneficiaries. It serves as an independent, objective opinion based on their analysis of items such as customer complaints, available cash flow, and acceptable risk.

The brief history of A.M. Best

A.M. Best has been in business for a very long time – since 1899. It was founded with a mission to report on the financial stability of insurers and the industry as a whole. It is, in fact, the oldest rating agency and one of the most widely recognized providers of ratings, financial data, and insurance industry news.

As we know, earthquakes are devastating for everyone affected, but the 1906 San Francisco earthquake and the fire caused by it put A.M. Best firmly on the map. A.M. Best, only seven years old at the time, was the go-to source for insurance-related news after the quake. In addition to firsthand reports on the fire insurance losses attributed to the earthquake and fire, A.M. Best issued its “Special Report Upon San Francisco Losses and Settlements“ in 1907, which detailed the insurance losses experienced as a result of the 1906 earthquake and ensuing fire.

This kind of expanded and reliable reporting and rating service was seen as invaluable in the wake of the San Francisco quake, which bankrupted 12 American insurance companies and two European insurers. The newly appreciated need for an indication of long-term financial stability led to A.M. Best’s impressive growth in the first part of the 20th century.

More than 100 years later, A.M. Best continues to enjoy a sterling reputation for its analysis of financial stability within the insurance industry.

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How A.M. Best reports on financial strength

What’s under the hood when it comes to A.M. Best’s rating system? Plenty.

A.M. Best issues financial strength and issuer credit ratings. The financial strength ratings (FSRs) represent “an independent opinion of an insurer’s financial strength and ability to meets its ongoing insurance policy and contract obligations.” In determining a rating, A.M. Best analyzes the insurer’s company profile, financial performance, operating performance, balance sheet strength, enterprise risk management, performance vis-a-vis its peers, and management style.

The company’s FSRs use a “report card” style of ratings, with the rating categories indicating not only how likely the insurer will be able to meet its obligations, but also how vulnerable it may be to adverse underwriting and economic conditions. The FSRs are broken down as follows by

A.M. Best:

  • A+/Superior: insurer has a superior ability to meet obligations
  • A/Excellent: insurer has an excellent ability to meet obligations
  • B+/Good: insurer has a good ability to meet obligations
  • B/Fair: insurer has a fair ability to meet obligations and is vulnerable
  • C+/Marginal: insurer has a marginal ability to meet obligations and is vulnerable
  • C/Weak: insurer has a weak ability to meet obligations and is very vulnerable
  • D/Poor: insurer has a poor ability to meet obligations and is extremely vulnerable

MassMutual’s A.M. Best rating

Haven Life is backed and wholly owned by MassMutual, a more than 160-year-old life insurer with an A++ rating from A.M. Best.* That’s the highest rating available from this agency.

As a life insurance startup, we recognize the significance of your family’s trust in our ability to be there when you need us most. That’s why we have your back, and MassMutual has ours. Every Haven Term policy we sell is issued by our parent company.

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Other ratings and reviews to consider

A.M. Best certainly has an impressive pedigree when it comes to rating agencies. Even so, you should make other stops on the way to evaluating an insurer or agency before you purchase a policy.

The top rating agencies

After you’ve seen what A.M. Best has to say about your insurer (or prospective insurer), check out some of the other well-known rating agencies, such as Moody’s, Standard & Poor’s or Fitch.

What customers have to say

Don’t stop there. See what real-life people have experienced with your agency or insurer by searching out customer reviews and testimonials. Third-party review sites, such as TrustPilot and Consumer Affairs, are a good place to start when seeking real testimonials from real customers who’ve gone through the experience.

Using A.M. Best ratings to find the right coverage for you

You can never be too selective when your family’s financial security is at stake. Put your insurer through the paces to help access the likelihood it will be there when you need it most. Reviewing A.M. Best ratings for each insurer is a terrific place to start when you’re researching life insurance.

Once you’ve identified the top life insurance companies, the next stop on your journey should be to get an estimate for how much a policy will cost. You’ll probably be pleasantly surprised at how affordable term life insurance coverage can be.

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Rachel Parisi is a freelance writer and attorney. She focuses her writing on insurance, financial services, and employee benefits. In her previous life, she served in the United States Air Force as a missile combat crew commander (think ‘Wargames’).

Financial strength ratings are as of September 24, 2019: A.M. Best Company: A++ (Superior; top category of 15); Fitch Ratings: AA+ (Very Strong; second category of 21); Moody’s Investors Service: Aa3 (High Quality; fourth category of 21); Standard & Poor’s: AA+ (Very Strong, second category of 21). Ratings are for MassMutual (Springfield, MA 01111) and its subsidiaries, C.M. Life Insurance Co. and MML Bay State Life Insurance Co. (Enfield, CT 06082). Ratings are subject to change. 

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About Tom Anderson

Tom Anderson is an award-winning financial journalist whose work has appeared in CNBC.comKiplinger’s Personal FinanceMoneyMonocle and Wired. He was a 2008-09 Knight-Bagehot Fellow in Economics and Business Journalism at Columbia University.

Read more by Tom Anderson

Our editorial policy

Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

Our disclosures

Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit:

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