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Life Insurance Basics
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Types of Life Insurance
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Buying & Saving Money
How should I choose what type of life insurance to
buy?
How do I pick a life insurance company?
 How can I assess the financial strength of an
insurance company?
How should I choose a life insurance agent?
How can I save money on life insurance?
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Special Buying Situations
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Keeping Your Life Insurance Current
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Help
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Facts
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Life Insurance News Feed |
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Five independent agencies—A.M. Best, Fitch,
Moody’s, Standard & Poor’s, and Weiss—rate the financial strength of
insurance companies. Each has its own rating scale, its own rating
standards, its own population of rated companies, and its own
distribution of companies across its scale. Each agency uses numbers or
plusses and minuses to indicate minor variations in rating from another
rating class.
The agencies disagree often enough so that you should consider a
company’s rating from two or more agencies before judging whether to buy
or keep a policy from that company. Moreover, agencies will announce
changes of ratings on any day. It’s probably prudent to check annually
on the ratings of any company you’re interested in.
Some points for using the ratings:
-
Don’t rely only on what the insurance companies
say about their ratings from these agencies. Companies are likely to
highlight a higher rating from one agency and ignore a lower one
from another agency, or to select the most favorable comments from a
rating agency’s report.
-
To use the ratings from more than one independent
agency, you need to understand that each agency’s rating code is
different from the others. For example, an A+ from A.M. Best is the
next-to-top rating of its 15 categories, but an A+ from Fitch or S&P
is their 5th-highest rating (out of 24 categories for Fitch, and out
of 19 categories for S&P). Moreover, Moody’s doesn’t have an A+
rating.
However, the ratings can be classified into “secure”
and “vulnerable” mega-categories. Here, as of August 2004, are the
rating scales for each of the “secure” rating classes, and all the
“vulnerable” classes combined (source, except for Weiss: The Insurance
Forum, September 2004 issue).
Rating Agency |
Category |
Description |
# of companies in category |
% of rated companies
in category |
| A.M. Best |
A++ |
Superior |
97 |
6.4 |
| |
A+ |
Superior |
223 |
14.8 |
| |
A |
Excellent |
292 |
19.3 |
| |
A- |
Excellent |
325 |
21.5 |
| |
B++ |
Very good |
179 |
11.9 |
| |
B+ |
Very good |
141 |
9.3 |
| |
B and lower |
Vulnerable |
253 |
16.8 |
| |
|
|
|
|
| Fitch |
AAA |
Exceptionally strong |
32 |
8.2 |
| |
AA+ |
Very strong |
54 |
13.9 |
| |
AA |
Very strong |
60 |
15.4 |
| |
AA- |
Very strong |
78 |
20.1 |
| |
A+ |
Strong |
37 |
9.5 |
| |
A |
Strong |
43 |
11.1 |
| |
A- |
Strong |
36 |
9.3 |
| |
BBB+ |
Good |
18 |
4.6 |
| |
BBB |
Good |
13 |
3.3 |
| |
BBB- |
Good |
6 |
1.5 |
| |
BB+ and lower |
Vulnerable |
12 |
3.2 |
| |
|
|
|
|
| Moody's |
Aaa |
Exceptional |
22 |
7.0 |
| |
Aa1 |
Excellent |
20 |
6.4 |
| |
Aa2 |
Excellent |
42 |
13.4 |
| |
Aa3 |
Excellent |
90 |
28.7 |
| |
A1 |
Good |
20 |
6.4 |
| |
A2 |
Good |
36 |
11.5 |
| |
A3 |
Good |
48 |
15.3 |
| |
Baa1 |
Adequate |
14 |
4.5 |
| |
Baa2 |
Adequate |
4 |
1.3 |
| |
Baa3 |
Adequate |
3 |
1.0 |
| |
Ba1 and lower |
Vulnerable |
15 |
4.8 |
| |
|
|
|
|
| S & P |
AAA |
Extremely strong |
55 |
8.7 |
| |
AA+ |
Very strong |
9 |
1.4 |
| |
AA |
Very strong |
111 |
17.5 |
| |
AA- |
Very strong |
48 |
7.6 |
| |
A+ |
Strong |
82 |
12.9 |
| |
A |
Strong |
138 |
21.7 |
| |
A- |
Strong |
33 |
5.2 |
| |
BBB+ |
Good |
68 |
10.7 |
| |
BBB |
Good |
39 |
6.2 |
| |
BBB- |
Good |
8 |
1.3 |
| |
BB+ and lower |
Vulnerable |
44 |
7.0 |
| |
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| Weiss |
A+ |
Excellent |
29* |
3 |
| |
A |
Excellent |
29* |
3 |
| |
A- |
Excellent |
29* |
3 |
| |
B+ |
Good |
282* |
29 |
| |
B |
Good |
282* |
29 |
| |
B- |
Good |
282* |
29 |
| |
C+ |
Fair |
380* |
39 |
| |
C |
Fair |
380* |
39 |
| |
C- |
Fair |
380* |
39 |
| |
D+ and lower |
Vulnerable |
272* |
28 |
| *As of March 25, 2003 |
Ratings Agency Contact Information
All of the ratings agencies can be found on the Web, or reached by
phone.
Agency |
Web site |
Address |
Phone number |
| A.M. Best Company, Inc |
www.ambest.com |
Ambest Rd.
Oldwick, NJ 08858 |
908-439-2200 |
| Fitch Ratings |
www.fitchibca.com |
1 State Street Plaza
New York, NY 10004 |
1-800-75-FITCH |
| Moody’s Investor
Services* |
www.moodys.com |
99 Church Street New
York, NY 10007 |
212-553-0300 |
| Standard & Poor’s
Insurance Ratings Services* |
www2.standardandpoors.com |
55 Water Street
New York, NY 10004 |
212-438-2000 |
| Weiss Research** |
www.weissratings.com |
15430 Endeavor Drive
Jupiter, FL 33478 |
800-289-9222 |
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*To use
these Web sites, you have to register, but it’s free.
**Weiss
charges $14.99 for each rating.
However, its public Web site lists the ten highest and
ten lowest ranked companies, and the companies themselves might
reveal their Weiss rating. |
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