Glossary

AM Best rating

AM Best's letter-grade opinion of an insurer's financial strength and ability to pay claims, widely used by lenders and contracts as a minimum standard.

Also called: AM Best financial strength rating, AM Best FSR, A.M. Best rating, A- VII

AM Best, the insurance-focused rating agency, assigns each insurer a Financial Strength Rating (FSR), its opinion of the company's ability to meet ongoing policy obligations. The scale runs A++ and A+ (Superior), A and A- (Excellent), B++ and B+ (Good), B and B- (Fair), then C++ down to D for marginal, weak and poor, with E, F and S for supervision, liquidation and suspension.

Contracts and lenders often require "A- VII" or better. The Roman numeral is the Financial Size Category, which reflects adjusted policyholders' surplus; category VII corresponds to $50 million to $100 million. A lease or construction contract that asks for A- VII is asking for both strength and size.

Ratings change, so check the current one on AM Best's site, not a carrier's marketing page or an old quote. The rating measures claims-paying ability, not claims service, price or appetite, and a lower-rated carrier is not automatically unsafe. It can still make your certificate of insurance unacceptable to a counterparty whose contract sets a minimum. The guide on AM Best ratings explained shows how to read the rating and outlook, and admitted insurer status affects what happens if a company fails.

Last reviewed October 10, 2026

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Related terms

Statutory surplus An insurer's admitted assets minus its liabilities under regulatory accounting rules, the capital cushion that stands behind policies beyond its loss reserves. Risk-based capital A regulatory formula for the minimum capital an insurer must hold against asset, underwriting and reserve risks, with escalating action as capital falls. Admitted insurer An insurance company licensed by a state's insurance department to sell policies there, subject to that state's filing rules and guaranty fund protection. Guaranty fund A state-created safety net that pays covered claims, up to statutory limits, when an admitted insurer becomes insolvent. Loss ratio Incurred claim costs divided by earned premium, shown as a percentage; the basic gauge of whether the premium collected is covering claims.

Related guides

AM Best ratings explained for business buyers What A++ to F mean, how to read "A- VII" in a contract, and what a financial strength rating does not tell you about an insurer's claims handling. How to review the insurance requirements in a contract A step-by-step method for reading the insurance clause in a lease, vendor or construction contract, matching it to your policies and fixing gaps before signing. Fronting arrangements and fronting carriers: how they work A fronting carrier issues the policy on its paper while a captive or reinsurers carry the risk. Fees, collateral, credit risk and what the policyholder sees. How to judge a business insurance company Judge an insurer on financial strength, complaint record, claims reputation, appetite for your class and stability, using AM Best, NAIC and J.D. Power data. How to read an insurance company's earnings report How to read an insurer's earnings release as a buyer: combined ratio, reserve releases, renewal pricing and retention, using Travelers' Q2 2026 as the example. Leadership changes at insurers and brokers: why they matter to buyers Why a new CEO, chief underwriting officer or broker leader can change your coverage, pricing and service, which signals matter, and where to track people moves.

Related insurers

Auto-Owners Insurance Lansing, Michigan mutual that sells only through independent agents in 26 states; a top-10 U.S. writer of commercial package, commercial auto and fire. Berkshire Hathaway No. 4 U.S. business insurer through a family of separately run units: BHSI, MedPro, GUARD, biBERK, USLI, RSUI and BHHC. Major units rated A++ by AM Best. Brotherhood Mutual Fort Wayne insurer for churches, Christian schools, colleges, camps and mission groups since 1917. Rated B++ by AM Best after a 2024 downgrade. Chubb Global insurer and the No. 1 U.S. writer of business liability coverage. A++ rated, with Westchester for E&S and online quotes for small firms. Church Mutual Wisconsin specialist that insures more than 50,000 churches plus nonprofits, schools and camps; rated A (Excellent) with a negative outlook since 2024. GNY (Greater New York Mutual) New York mutual founded in 1914 that writes package policies for apartment, co-op, office, restaurant and light industrial risks in 16 states and D.C.

Related tools

Certificate of insurance (COI) review checklist Check a received certificate for the named insured, dates, limits, endorsements and insurer ratings. Each answer becomes a pass or a flag. Compare business insurers Filter business insurers by type and AM Best rating, then compare up to three side by side on size, ratings, contacts, distribution and who they suit.