There are several companies publishing financial strength ratings on insurance companies. It is in your best interest to check the financial strength of any insurance company you are interested in doing business with.
A.M. Best | Fitch | Standard & Poors | Moody’s
A.M. Best Insurance Ratings
Address: Ambest Road, Oldwick, NJ 0885
Phone: (908) 439-2200
A.M. Best Ratings Definitions
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| A++ and A+ | Superior | Companies with either of these ratings are among the top rated in the industry. |
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| A and A- | Excellent | These companies show a high degree of stability and a positive long term outlook. |
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| B++ and B+ | Good | These companies are stable, but have room for improvement. The long term outlook may be unsure. |
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| B and B- | Fair | While currently stable, these companies have a lot of room for financial improvement. Companies rated below a B+ may not be the best choices for long term insurance policies but may be suitable for short term policies such as car insurance. |
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| C++ and C+ | Marginal | Indicates that the company is going through some sort of financial turmoil. Consumer investment should only be made with extreme caution. Investors may be more interested in this rating because it shows the potential for future gains. |
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| C and C- | Weak | Indicates a company that is going through financial problems of one sort or another. Not a good choice for purchasing an insurance policy. |
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| D | Poor | This company has suffered some sort of major financial stress and is currently on shaky financial ground. Companies with a rating of D may not be suitable for insurance purchases or long term investments. |
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| E | Under regulatory supervision | Indicates a company which is being investigated or administrated by outside agency. |
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| F | In liquidation | Indicates a company that is being liquidated to pay debts. An F-rated company is probably not allowed to sell insurance products, and would not be a wise investment. |
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| S | Suspended | This company, for whatever reason, is no longer accepting new customers or investments. |
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Fitch Insurance Ratings
Address: One State Street Plaza, New York, NY 10004
Phone: (212) 908-0500
Fitch Ratings Definitions
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| AAA | Highest credit quality | Denotes the lowest expectation of default risk. |
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| AA | Highest credit quality | Denote expectations of very low default risk. |
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| A | Highest credit quality | Denote expectations of low default risk |
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| BBB | Highest credit quality | Indicate that expectations of default risk are currently low |
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| BB | Speculative | Indicate an elevated vulnerability to default risk, |
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| B | Speculative | Indicate that material default risk is present, but a limited margin of safety remains |
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| CCC | Substantial credit risk | Indicates default is a real possibility. |
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| CC | Substantial credit risk | Indicates default is a real possibility. |
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| C | Substantial credit risk | Default is imminent or inevitable, or the issuer is in standstill. |
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| RD | Substantial credit risk | Denotes that Fitch’s opinion of the company is that they have experienced an uncured payment default on a bond, loan or other material financial obligation but has not yet entered bankruptcy. |
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| D | Default | Indicates that Fitch’s opinion is that the company has entered into bankruptcy or has ceased business operations. |
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Standard & Poor’s Insurance Ratings
Address: 55 Water Street, New York, NY 10041
(212) 438-1000
Standard & Poors Rating Definitions
AAASuperiorThese are the top rated companies in the financial field. Triple A ratings are viewed as stable and trustworthy.
AAExcellentCompanies with a double A rating are stable and have met most of the requirements of a top rating but still have area where some improvement may be necessary.
AGoodFor consumer purposes, this could be considered an average rating. Dealing with companies of an A or higher rating is usually a safe investment, both in the short and long terms.
BBBFairThis rating, while stable, indicates that the company has undergone financial stresses recently. Before investing, it would be wise to investigate the company further.
BBNeeds ImprovementThis is the middle rating on the Standard and Poor’s rating system. Companies rated higher than BB are usually safe investments, while companies rated lower may be an indication that the company is experiencing some sort of financial difficulty.
BBarely acceptableThis rating could be a good sign for investors who are looking for a company about to turn around, but it indicates a company that is not trusted enough for long term insurance policies at the consumer level.
CCCPoorThis rating indicates the company is experiencing internal problems or is being affected by external pressures. A CCC rating is not a good choice for purchasing insurance and should only be considered as an investment after careful investigation.
CCExceptionally poorSevere problems have either occurred or are forecast for the company. A CC rating shows little stability and not much indication of potential future growth without investor intervention.
CFailingCompanies rated C may not be insolvent, but they are not on stable financial ground. This rating is the lowest available from Standard and Poor’s rating system, and is generally assigned to companies with uncertain financial futures.
Moody’s Insurance Ratings
Address: 60 State Street, Suite 700, Boston, MA 02109
Phone: (212) 553-1653
Moody’s Ratings Definitions
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| Aaa | Superior | Companies with this rating are graded as among the most stable financial institutions. |
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| Aa | Excellent | This grade shows potential for long term growth, with the potential for an even higher rating. |
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| A | Good | This rating has room for improvement, but is still considered a safe and stable investment. |
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| Baa | Fair | This rating, while it is still stable, indicates that the company has undergone financial difficulties. Further research is advised before investing or purchasing long-term insurance contracts. |
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| Ba | Needs Improvement | This rating is given to companies which indicate a strong financial foundation but have suffered monetary setbacks or losses recently. This is probably not a good company for long term investments, but it is still far from a loss. |
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| B | Barely acceptable | Companies with this rating are probably not a good insurance or investment choice. Wait to find out whether the ratings go up or down in future ratings before investing. |
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| Caa | Poor | Companies with a Caa rating are going through financial turmoil. Consumers would be best advised to avoid purchasing from these companies until the financial outlook has improved. |
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| Ca | Exceptionally poor | A company rated as Ca is not a good choice for long or short term insurance policies. Investors may want to keep an eye on the company to help make future investment decisions, but investing in a Ca rating should only be done if you have reason to believe that the company is about to make a turnaround. |
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| C | Failing | A company with this rating is probably going through serious financial upheavals. While your policy may still be safe, it would require further research before purchasing, and then only if a market analysis indicates future growth is imminent. |
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