Guides
Financial strength ratings: AM Best, S&P, Moody's and Demotech
What insurer financial strength ratings measure, how the AM Best, S&P, Moody's, Fitch, KBRA and Demotech scales differ, and how to check yours.
A financial strength rating is an independent agency's opinion of whether an insurer will be able to pay its policyholders' claims. For home insurance, the agencies you will meet most are AM Best, which rates most national and regional carriers, and Demotech, which rates many smaller and Florida-based carriers. S&P Global Ratings, Moody's, Fitch and Kroll Bond Rating Agency (KBRA) rate larger groups and some specialty and newer companies.
The letters are not interchangeable. An "A" from AM Best, an "A" from S&P and an "A" from Demotech sit on different scales and mean different things, which is why you should know who issued a rating, what the scale means and whether it is current.
What a rating measures, and what it does not
Fitch's description, in a 2016 white paper hosted by the NAIC, is that insurer financial strength ratings speak to the likelihood that policyholder obligations will be paid in full and on a timely basis. In practice, an analyst looks at the insurer's policyholder surplus (its capital cushion), how much risk it writes against that surplus, its earnings, and for property insurers the catastrophe exposure and reinsurance behind the book.
A rating does not measure claims service, price, speed, coverage quality or complaints. A highly rated company can be slow on a roof claim, and a smaller, lower-rated one can be prompt. Use the NAIC complaint index and What J.D. Power's home insurance studies measure for service evidence. A rating also does not rate the brand: it rates a specific legal company or pooled group, so match it to the insurer named on your declarations page.
The usual business model matters too. The Fitch paper notes that an insurer typically pays the agency for a requested rating, although agencies can also publish unsolicited ratings. Rating agencies are regulated and must separate their rating and business activities, but you should still read a rating as an opinion, not a guarantee.
The agencies and their scales
| Agency | Scale, top to bottom | What the top bands mean | Where you will see it |
|---|---|---|---|
| AM Best | A++, A+, A, A-, B++, B+, B, B-, C++, C+, C, C-, D (13 grades) | A++ and A+ Superior; A and A- Excellent; B++ and B+ Good. B and below are labeled vulnerable. E (regulatory supervision), F (liquidation) and S (suspended) are status codes | Most national, regional and mutual home insurers |
| S&P Global Ratings | AAA, AA, A, BBB, BB, B, CCC, CC, with plus and minus modifiers; R for regulatory supervision | AAA extremely strong; AA very strong; A strong; BBB good; BB and lower vulnerable | Large groups and some insurtechs |
| Moody's | Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C, with numerical modifiers | Same ladder as S&P with different symbols; Baa3 is the lowest investment-grade step | Large groups |
| Fitch | AAA through C, 19 categories | Same ladder as S&P | Large groups |
| KBRA | S&P-style letter grades with an outlook, such as BBB+ (stable) | Accepted by Fannie Mae and Freddie Mac at BBB or better | Some Florida and specialty carriers |
| Demotech | A″, A′, A, S, M, L | A″ and A′ Unsurpassed; A Exceptional; S Substantial; M Moderate; L Licensed | Many Florida and other regional carriers |
The AM Best, S&P, Moody's and Fitch scales are as laid out in Fitch's 2016 white paper and an S&P presentation, both hosted by the NAIC. Demotech's scale is from its FSR definitions.
Examples from our profiles
These come from our insurer profiles and show how the scales appear in practice: Chubb is rated A++ (Superior) by AM Best as of September 2026, AA by S&P and Aa2 by Moody's. Erie Insurance is A (Excellent) from AM Best as of April 2026. Frontline Insurance carries a KBRA BBB+ (stable) rating, and Florida Peninsula a Demotech A (Exceptional). Always check the agency's site for the current rating, because these change.
Why the same letter is not the same quality
Three differences matter.
Scales do not map one to one. AM Best's 13-grade ladder was built differently from the S&P-style scale. The 2016 Fitch paper argued that AM Best's A- is most comparable to BBB at Fitch, Moody's and S&P, and that treating them as equivalent understates risk. Fitch is a competitor, and the paper is a decade old, so treat that as one agency's argument, not a settled conversion table. The practical lesson is that a rating's letter has meaning only on its own agency's scale.
Demotech's scale is built around expected survival. Demotech ties each category to the share of insurers it expects to keep positive surplus 18 months after the rating: 100% for A″, at least 99% for A′, at least 97% for A, at least 95% for S, and at least 90% for M, according to its definitions. An A is therefore a statement about near-term survival under Demotech's tests, not a claim about being among the strongest companies. Our Demotech ratings and Florida's insurers guide covers where it works and where critics push back.
Agencies look at different insurers. Large groups are usually rated by AM Best and S&P. Small, newer or regional insurers often hold only a Demotech or KBRA rating. A lower or less familiar letter is not a reason to reject a company by itself, but it is a reason to read the rating notice and the company's age and reinsurance.
What your mortgage lender accepts
If you have a mortgage, your lender may require an insurer with a minimum rating. Fannie Mae's Selling Guide (section B7-3-01, 12/14/2022 revision) says the insurer must meet one of these: AM Best B or better, Demotech A or better, KBRA BBB or better, or S&P BBB or better. It need meet only one agency's requirement even if rated by several. The same section makes an exception for FAIR plans and state wind pools when they are the only coverage obtainable. Freddie Mac added KBRA in early 2023 and also accepts Demotech.
These are lender minimums, not recommendations. An insurer can pass them and still be a poor fit for your risk. See Fannie Mae and Freddie Mac homeowners insurance requirements and what mortgage lenders require from your homeowners policy.
How to check the rating behind your policy
- Find the legal insurer. The declarations page names the company issuing the policy, which may differ from the brand on your ID card or the MGA you bought from.
- Look up the rating on the agency's own site. For Florida and regional carriers, check Demotech; for others, AM Best or the carrier's own financial pages. A rating quoted on an insurer's website is worth confirming against the agency's own notice.
- Write down the date and the outlook. A rating can be positive, stable or negative, or placed under review after a catastrophe. A rating from two years ago may no longer stand.
- Check the exact entity. Groups may have several companies with different ratings.
- Compare with your lender's minimum. Ask your mortgage servicer in writing if you are unsure.
- Add non-rating evidence. Add complaints, J.D. Power, the state insurance department and how long the company has written your area. See how to research a home insurer in 15 minutes.
What a rating cannot promise
Ratings reduce the odds of a failure; they do not remove them. When an insurer becomes insolvent, state guaranty fund programs typically step in to pay covered claims up to statutory limits, which vary by state. Policyholders may then deal with delays, caps and a new insurer. Read what happens if your home insurer goes insolvent and property and casualty guaranty funds explained before you need them.
Key takeaways
- A financial strength rating is an agency's opinion of an insurer's ability to pay claims. It says nothing about price, service or claims fairness.
- AM Best and Demotech are the agencies homeowners meet most; S&P, Moody's, Fitch and KBRA rate larger or specialty groups. Their letters sit on different scales.
- Fitch argued in 2016 that AM Best's A- compares to BBB at the other agencies, so do not equate letters across agencies.
- Fannie Mae accepts any one of AM Best B or better, Demotech A or better, KBRA BBB or better, or S&P BBB or better.
- Check the rating of the legal insurer on your declarations page, with its date and outlook, and pair it with complaint and claims evidence.