A.M. Best's interactive financial strength assessment provides an objective opinion on the ability of a specific insurance operation to meet its ongoing obligations to policyholders. That opinion is derived from the analysis of many quantitative and qualitative measures, including comparisons to peers, industry standards and Best's proprietary benchmarks. It also incorporates an evaluation of the insurer's operating plans, philosophy and management, future profitability and liquidity.

Best's Financial Strength Rating scale ranges from the highest, "A++" (Superior) to the lowest, "F" (In Liquidation), and is divided into two broad categories---Secure and Vulnerable. Based on Best's Insolvency Studies, Secure-rated companies have experienced a very low failure frequency; significantly lower than Vulnerable-rated companies as well as companies not-rated or not followed by A.M. Best. The time frame for the ability of companies to meet their current and ongoing obligations to policyholders varies. The higher a company's Secure rating, the greater its ability to withstand adverse changes in underwriting and economic conditions over longer periods. Companies with a vulnerable rating (but above D (Poor) have only a current claims-paying ability.

The financial strength assessment involves ongoing, in-depth reviews and incorporates a host of public and proprietary financial data and information. It takes into account an evaluation of country risks (e.g., general government economic policies, exchange risks, financial reserves and interest rates) and country-specific insurance regulations. The analytical components of Best's interactive rating process involve numerous quantitative and qualitative factors that are grouped into three evaluative categories:

• Balance Sheet Strength --- This is a major determinant in a company's ability to meet its current and ongoing obligations to policyholders. For an insurer to remain viable in the marketplace, it must perpetuate a financially strong balance sheet for its policyholders.
• Operating Performance --- When evaluating operating performance, Best's analysis centers on the stability and sustainability of the company's sources of earnings in relation to the liabilities that are retained by the company.
• Business Profile --- The factors that comprise an insurer's business profile drive current and future operating performance and, in turn, can affect long-term financial strength and the company's ability to meet its obligations to policyholders.

Ratings are approved and modified through a specific committee process, including an executive committee of A.M. Best senior officers. Going forward, Best's Ratings are reviewed formally at least every 12 months. A.M. Best's analysts maintain contact with company management throughout the year to monitor each company's ongoing performance. Ratings are re-evaluated continually for interim changes that might arise during the year or in conjunction with Best's ongoing dialogue with company management.

For more details on each aspect of Best's Rating process visit our Rating Methodology page.