The Difference Between AM Best Rating and Standard & Poor's

What is an AM Best Rating?

An AM Best Rating is a financial strength rating assigned to an insurance company by A.M. Best, an independent global rating agency. A rating of A++, A+, A, A- and B++ are considered superior, while those of B+, B, B-, C++ and C+ are considered fair. Ratings of C, D and E are considered weak. AM Best Ratings are based on the company's balance sheet strength, operating performance and business profile.

What is Standard & Poor's?

Standard & Poor's, or S&P, is a global credit ratings agency that assesses the creditworthiness of companies, debt issuers and financial institutions. S&P's ratings range from AAA, the highest, to D, the lowest. Investment-grade ratings range from AAA to BBB-, while ratings below BB+ are considered speculative.

How Do AM Best Ratings and Standard & Poor's Compare?

AM Best Ratings and Standard & Poor's ratings are similar in that they both provide an assessment of a company's financial strength. However, the two rating systems differ in their approach and the factors they consider when assessing the financial strength of a company. AM Best focuses on the balance sheet strength, operating performance and business profile of an insurance company, while S&P takes into account the company's creditworthiness and its ability to pay back debt.

Conclusion

AM Best Ratings and Standard & Poor's ratings are both important measurements of a company's financial strength. Insurance companies, debt issuers and financial institutions should pay close attention to their ratings, as they can have a major impact on their ability to access capital. As such, it is important to understand the differences between the two rating systems and how they can affect a company's creditworthiness.