insurance company rating

Definition

System developed by the US firm A. M. Best & Company to rate life, general (non-life), and reinsurance companies on the basis of their strength and weaknesses. These are: A++ or A+ (Superior), A or A- (Excellent), B++ or B (Very good), B or B- (Fair), C++ or C (Marginal), C or C- (Weak), D (Poor), E (Under regulatory supervision), D (In liquidation), S (Rating suspended). An insurance company must have the rating of B+ or better to indicate that it is secure in four critical areas: (1) underwriting, (2) expense control, (3) reserve adequacy, and (4) investments.