Alfred M. Best, born August 31, 1876 in Caldwell, NJ, was a student, writer, editor, publisher and recognized authority on insurance. In 1899, he launched AM Best, the company that bears his name, and along with it, the credit rating industry. He introduced and championed proper interpretation of insurance accounting, advocated financial standards to serve as guides for the development of sound insurance operations, and wrote and published annual reports and studies that set the standard for impartiality and objectivity throughout the insurance industry.
His recognized insurance expertise was consulted frequently in testimony before government bodies, most notably the Temporary National Economic Committee of the U.S. Congress.
At the age of 15, Best was hired as a junior clerk at the Queen Insurance Company of America. Later, as assistant to the placer for the New York brokerage firm Owens and Phillips, he gained his first acquaintance with insurance company officials during his visits to many New York insurance offices. A subsequent experience as assistant to the underwriter of a fraudulent Lloyds outfit convinced him that he was in “a den of thieves,” and his next editorial and sales positions for a prominent insurance periodical persuaded him that there was a need for an independent arbiter of insurance company financial health. As Best put it, “there should be some place where any one interested, whether insured, agent or broker, could obtain a reliable report upon the financial condition and operating methods of insurance companies.”
Hence, on December 14, 1899, AM Best was incorporated in a small office room with a second-hand desk, an old typewriter, and a part-time stenographer. The following spring, Best introduced the first edition of Best’s Insurance Reports; five months later, he added a monthly supplement to the annual volume, the forerunner of today’s Best’s Review magazine. He issued the first insurance company credit ratings in 1905 at the behest of the New York Insurance Superintendent, and in 1907 expanded the concept with the introduction of Best’s Key Rating Guide. He later added commentary on policy conditions, premium rates, dividends, net costs and surrender values and included this information in a separate volume. He also advanced the use of the combined ratio in assessing an insurer’s underwriting profit. Many other innovations followed over the years and remain in use today.
Alfred M. Best was a pioneer in creating products and services that strengthen the financial solvency, stability and sustainability of the insurance industry for the benefit of all stakeholders. His influence continues to have an impact on the global insurance industry today.