AM Best: Definition, History, and How Rating System Works

What Is AM Best? AM Best is a credit rating agency focused exclusively on the worldwide insurance industry. AM Best assigns credit ratings that assess an insurance company's creditworthiness, which refers to the likelihood the company will default on its obligations. Consumers, financial professionals, and investors all use AM Best's credit ratings to help them make informed decisions. AM Best uses a ranking system to provide the marketplace with a quantified assessment of a company's financial health. The U.S. Securities and Exchange Commission (SEC) has designated the company a nationally recognized statistical rating organization.Key TakeawaysAM Best is a credit rating agency that specializes in assessing the creditworthiness of insurance companies.Alfred M. Best founded AM Best in 1899 in New York City and began its ratings scheme following the 1906 San Francisco earthquake.AM Best uses both qualitative and quantitative measures to assess an insurance company's ability to pay claim...