From 1906 until the mid-1980s, A.M. Best, a rating service that specialized in the insurance industry, was the recognized rating service for life and property-liability insurance companies. Most large insurance companies had a top rating (then A+) from A.M. Best, and those that did not were at a disadvantage in marketing their products.

During the 1980s, the three multi-industry rating services (Standard and Poor�s, Duff and Phelps, and Moody�s) began for the first time to rate large numbers of life insurance companies. These ratings are known as claims-paying ability or financial strength ratings. They are an outgrowth of the ratings that had been assigned traditionally by these agencies to the long-term debt, commercial paper, and preferred stock issues of companies, including insurance companies. The major difference is that a claims-paying ability rating represents an assessment of a company�s ability to meet its obligations to all of its policyowners, while the traditional rating related to a particular bond or stock issue. Coming at a time of concern about the solvency of the life insurance industry resulting from the failures of Executive Life and Mutual Benefit, the many bank failures, and the collapse of the commercial real estate market, the substantial growth in the number of life insurance companies rated by these widely respected, traditional rating agencies had a strong impact on the industry and its customers.