Life
Insurance Quotes Wiz: What do the ratings of life insurance companies
look like? |
Your
life insurance is only as good as the company that issues it.
So when you buy life insurance, it's wise to make certain that
the issuing company is financially sound. The A.M. Best Company,
Standard & Poor's, and Moody's Investors Services are well-regarded
rating companies that provide objective measures of insurance
companies' creditworthiness. Here is a sample of their ratings
and what they mean.
The
A.M. Best Company:
A.M. Best is perhaps the best known of
all the insurance rating companies. It publishes over 50 different
information products about insurance companies and the insurance
industry. Here is an overview of what the A.M. Best rating system
means. |
 |
The
following ratings are considered "secure" ratings by
A. M. BEST: |
|
A++
and A+ (Superior): |
The
company has demonstrated superior overall performance and has
a very strong ability to meet its obligations to policyholders
over a long period of time. |
|
|
A
and A- (Excellent): |
The
company has demonstrated excellent overall performance and has
a strong ability to meet its obligations to policyholders over
a long period of time. |
|
B++
and B+ (Very Good): |
The
company has demonstrated very good overall performance and has
a good ability to meet its obligations to policyholders over a
long period of time. |
|
The
following ratings indicate that a company is "vulnerable"
to financial difficulties in the
future by A. M. BEST: |
|
B
and B- (Adequate): |
The
company has an adequate overall performance and can meet its obligations
to policyholders, but may be vulnerable to unfavorable changes
in underwriting or economic conditions. |
|
| C++
and C+ (Fair): |
The
company has demonstrated fair overall performance and can meet its
current obligations to policyholders, but is vulnerable to unfavorable
changes in underwriting or economic conditions. |
|
C
and C- (Marginal): |
The
company has demonstrated marginal overall performance. It can
meet its current obligations to policyholders, but it is very
vulnerable to unfavorable changes in underwriting or economic
conditions. |
|
D
(Very Vulnerable): |
The
company has demonstrated poor overall performance. The company
can meet its obligations to policyholders, but is extremely vulnerable
to unfavorable changes in underwriting or economic conditions. |
|
E
(Under State Supervision): |
The
company is under state insurance regulatory authority supervision,
control or restraint, such as conservatorship or rehabilitation,
but not including liquidation. This rating may be assigned if
the company is under a cease and desist order issued by a state
regulator other than from its state of domicile. |
|
F
(In Liquidation): |
The
company has been placed under an order of liquidation by a court
of law, or its owners have voluntarily agreed to liquidate. Companies
that voluntarily liquidate or dissolve their charters are generally
not insolvent. |
|
|
Standard
& Poor's:
Standard and Poor's rates the claims-paying
ability of over 300 insurance organizations worldwide, and monitors
public data on another 2,000 U.S. companies.
The
following ratings are considered "secure" ratings by
Standard & Poor's: |
|
AAA |
Superior
financial security on an absolute and relative basis. Capacity
to meet policyholder obligations is overwhelming under a variety
of economic and underwriting conditions. |
|
AA |
Excellent
financial security. Capacity to meet policyholder obligations
is strong under a variety of economic and underwriting conditions. |
|
| A |
Good
financial security, but capacity to meet policyholder obligations
is somewhat susceptible to adverse economic and underwriting conditions. |
|
| BBB |
Adequate
financial security, but capacity to meet policyholder obligations
is susceptible to adverse economic and underwriting conditions. |
|
The
following ratings are considered "vulnerable" ratings
by Standard & Poor's: |
|
| BB |
Financial
security may be adequate, but capacity to meet policyholder obligations,
particularly with respect to long-term or "long-tail"
policies, is vulnerable to adverse economic and underwriting conditions. |
|
| B |
Vulnerable
financial security. Currently able to meet policyholder obligations,
but capacity to meet policyholder obligations is particularly vulnerable
to adverse economic and underwriting conditions. |
| |
CCC |
Extremely
vulnerable financial security. Continued capacity to meet policyholder
obligations is highly questionable unless favorable economic and
underwriting conditions prevail. |
|
| NR |
Not
Rated. The insurer is not rated by Standard & Poor's. |
| |
| R |
Regulatory
action. As of the date indicated, the insurer is under supervision
of insurance regulators following rehabilitation, receivership,
liquidation, or any other action that reflects regulatory concern
about the insurer's financial condition. Information on this status
is provided by the National Association of Insurance Commissioners
and other regulatory bodies. Although believed to be accurate,
this information is not guaranteed. The "R" rating does
not apply to insurers subject only to non financial actions such
as market conduct violations. |
|
Plus
(+) or Minus (-) sign |
The
ratings from "AA" to "B" may be modified by
the addition of a plus or minus sign to show relative standing
within the major rating categories. Standard & Poor's ratings
and other assessments of creditworthiness and financial strength
are not a recommendation to purchase or discontinue any policy
or contract issues by an insurer or to buy, hold or sell any security
issued by an insurer. In addition, neither a rating nor an assessment
is a guaranty of an insurer's financial strength. |
|
Moody's:
Moody's Ratings, founded in 1909, rates the financial strength
of a variety of investment vehicles and institutions, including
corporate bonds, preferred stock, short-term debt, mutual funds
and insurance companies.
The
following ratings are considered "strong" by Moody's: |
|
Aaa |
Exceptional
financial security. While the financial strength of these companies
is likely to change, such changes as can be visualized are most
unlikely to impair their fundamentally strong position. |
|
Aa |
Excellent
financial security, together with the Aaa group, they constitute
what are generally known as high-grade companies. They are rated
lower than Aaa companies because long-term risks appear somewhat
larger. |
|
A |
Good
financial security. However, elements may be present which suggest
a susceptibility to impairment sometime in their future. |
|
Baa |
Adequate
financial security. However, certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. |
|
The
following ratings are considered "weak" by Moody's |
|
| Ba |
Questionable
financial security. Often the ability of these companies to meet
policyholder obligations may be very moderate and thereby not well
safeguarded in the future. |
|
B |
Poor
financial security. Assurance of punctual payment of policyholder
obligations over any long period of time is small. |
|
Caa |
Very
poor financial security. They may be in default on their policyholder
obligations or there may be present elements of danger with respect
to punctual payment of policyholder obligations claims. |
|
Ca |
Extremely
poor financial security. Such companies are often in default on
their policyholder obligations or have other marked shortcomings. |
|
C |
The
lowest rated class of insurance company; can be regarded as having
extremely poor prospects of ever offering financial security. |
|
|
1,
2, 3 Modifiers for each generic rating category from Aa to
B. 1 indicates that the insurance company ranks in the higher
end of its generic rating category. The modifier 2 indicates a
mid-range ranking. The modifier 3 indicates that the company ranks
in the lower end of its generic category.
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