To enhance the usefulness of ratings, AM Best assigns each rated (A++ through D) insurance company a Financial Size Category (FSC). The FSC is based on adjusted policyholders' surplus (PHS) in U.S. dollars and may be impacted by foreign currency fluctuations. The FSC is designed to provide a convenient indicator of the size of a company in terms of its statutory surplus and related accounts.
Many insurance buyers only want to consider buying insurance coverage from companies that they believe have sufficient financial capacity to provide the necessary policy limits to insure their risks. Although companies utilize reinsurance to reduce their net retention on the policy limits they underwrite, many buyers still feel more comfortable buying from companies perceived to have greater financial capacity.
|Class||Adj. PHS ($ Millions)||Class||Adj. PHS ($ Millions)|
|I||Less than 1||IX||250 to 500|
|II||1 to 2||X||500 to 750|
|III||2 to 5||XI||750 to 1,000|
|IV||5 to 10||XII||1,000 to 1,250|
|V||10 to 25||XIII||1,250 to 1,500|
|VI||25 to 50||XIV||1,500 to 2,000|
|VII||50 to 100||XV||2,000 or greater|
|VIII||100 to 250|