Best's Credit Rating Process

A Best's Credit Rating is approved and modified through a specific committee process, including an executive committee of A.M. Best senior officers. This committee approach ensures rating consistency across different business segments and maintains the integrity of the rating process and methodology.

A very important component of the interactive rating process is the ongoing discussion with the company's management. Management meetings afford A.M. Best's analysts the opportunity to review with the company factors that may affect its rating, including strategic goals, financial objectives and management practices. It is during these interactive meetings that a company typically will share information that may be extremely sensitive or proprietary in nature. For more information on rating meetings, read Preparing for a Rating Meeting.

1. Compile Information
The rating assessment begins with the compilation of detailed public and proprietary financial information, including annual and quarterly financial statements, regulatory filings, certified actuarial and loss reserve reports, investment guidelines, reinsurance security, annual business plans and Best's Supplemental Rating Questionnaire. For a more detailed list of information requirements, see Preparing for a Rating Meeting.

2. Perform Analysis
A.M. Best's analytical process incorporates a host of quantitative and qualitative measures that evaluate all sources of risk to an organization's financial health, including underwriting, credit, interest rate, country and market risks, as well as economic and regulatory factors.

The analysis includes comparisons to peers, industry standards and proprietary benchmarks, and an assessment of operating plans, philosophy, management and the implicit or explicit support of a parent or affiliate.

A complete list of Best's Credit Rating Methodologies is available.

3. Determine Best's Rating
An initial rating recommendation is developed based on the analytical process outlined above. Each rating recommendation is reviewed and modified, as appropriate, through a rigorous committee process that involves A.M. Best's analysts and senior rating officers possessing relevant expertise. This committee approach ensures rating consistency across different business segments and maintains the integrity of the rating process and methodologies. The final rating outcome is determined by one or more rating committees after a robust discussion of the pertinent rating issues and financial data.

Prior to public dissemination, the rating outcome is communicated to the company to which it is being assigned. If the company disagrees with the rating and believes that the information on which it was based was incomplete or misunderstood, the rating can be appealed. If new information is forthcoming, the rating may be reconsidered by the rating committee.

4. Disseminate Best's Rating
Best's Ratings are made available to the public without delay via A.M. Best's Web site and through a number of different data providers and news vendors. Best's Ratings also are released in a number of publications available in print and/or digital format.

5. Monitor Best's Rating
A.M. Best's analysts continually monitor current developments (e.g., public documents, news events) to evaluate the potential impact on a company's rating. Significant developments can result in a rating review, as well as modification of the rating or outlook.