Insurance Rating Systems

Insurance Company Rating Systems

A.M. Best

Grade
A++/A+
InterpretationSuperior. Very strong ability to meet obligations.
A/A-
InterpretationExcellent. Strong ability ot meet obligations.
B++/B+
InterpretationGood. Good ability to meet obligations.
B/B-
InterpretationFair. Adequate ability to meet obligations.
C++/C+
InterpretationMarginal. Reasonable ability to meet obligations.
C/C-
InterpretationWeak. Currently has the ability to meet obligations.
D
InterpretationPoor. Below minimum standards.
E
InterpretationUnder regulatory supervision.
F
InterpretationIn liquidation.
S
InterpretationRating Suspended - usually due to insufficient information.
GradeInterpretation
A++/A+Superior. Very strong ability to meet obligations.
A/A-Excellent. Strong ability ot meet obligations.
B++/B+Good. Good ability to meet obligations.
B/B-Fair. Adequate ability to meet obligations.
C++/C+Marginal. Reasonable ability to meet obligations.
C/C-Weak. Currently has the ability to meet obligations.
DPoor. Below minimum standards.
EUnder regulatory supervision.
FIn liquidation.
SRating Suspended - usually due to insufficient information.

Standard and Poor's

Grade
AAA
InterpretationExtremely strong financial security. Highest safety.
AA+/AA/AA-
InterpretationVery strong financial security. Highly safe.
A+/A/A-
InterpretationStrong financial security. More susceptible to economic change that highly rated companies.
BBB+/BBB/BBB-
InterpretationGood financial security. More vulnerable to economic change than highly rated companies.
BB+/BB/BB-
InterpretationMarginal financial security. Ability to meet obligations may not be adequate for long-term policies.
B+/B/B-
InterpretationWeek financial security. An unfavorable business environment will probably reduce its ability to meet obligations.
CCC+/CCC/CCC-
InterpretationVery weak. Currently able to meet obligations. Highly vulnerable to adverse economic conditions.
CC
InterpretationExtremely weak. Questionable ability to meet obligations.
R
InterpretationRegulatory action. Under supervision of insurance regulators.
NR
InterpretationNot rated. No opinion is expressed about the firm's financial condition.
GradeInterpretation
AAAExtremely strong financial security. Highest safety.
AA+/AA/AA-Very strong financial security. Highly safe.
A+/A/A-Strong financial security. More susceptible to economic change that highly rated companies.
BBB+/BBB/BBB-Good financial security. More vulnerable to economic change than highly rated companies.
BB+/BB/BB-Marginal financial security. Ability to meet obligations may not be adequate for long-term policies.
B+/B/B-Week financial security. An unfavorable business environment will probably reduce its ability to meet obligations.
CCC+/CCC/CCC-Very weak. Currently able to meet obligations. Highly vulnerable to adverse economic conditions.
CCExtremely weak. Questionable ability to meet obligations.
RRegulatory action. Under supervision of insurance regulators.
NRNot rated. No opinion is expressed about the firm's financial condition.

Standard and Poor's

Grade
AAA
InterpretationExtremely strong financial security. Highest safety.
AA+/AA/AA-
InterpretationVery strong financial security. Highly safe.
A+/A/A-
InterpretationStrong financial security. More susceptible to economic change that highly rated companies.
BBB+/BBB/BBB-
InterpretationGood financial security. More vulnerable to economic change than highly rated companies.
BB+/BB/BB-
InterpretationMarginal financial security. Ability to meet obligations may not be adequate for long-term policies.
B+/B/B-
InterpretationWeek financial security. An unfavorable business environment will probably reduce its ability to meet obligations.
CCC+/CCC/CCC-
InterpretationVery weak. Currently able to meet obligations. Highly vulnerable to adverse economic conditions.
CC
InterpretationExtremely weak. Questionable ability to meet obligations.
R
InterpretationRegulatory action. Under supervision of insurance regulators.
NR
InterpretationNot rated. No opinion is expressed about the firm's financial condition.
GradeInterpretation
AAAExtremely strong financial security. Highest safety.
AA+/AA/AA-Very strong financial security. Highly safe.
A+/A/A-Strong financial security. More susceptible to economic change that highly rated companies.
BBB+/BBB/BBB-Good financial security. More vulnerable to economic change than highly rated companies.
BB+/BB/BB-Marginal financial security. Ability to meet obligations may not be adequate for long-term policies.
B+/B/B-Week financial security. An unfavorable business environment will probably reduce its ability to meet obligations.
CCC+/CCC/CCC-Very weak. Currently able to meet obligations. Highly vulnerable to adverse economic conditions.
CCExtremely weak. Questionable ability to meet obligations.
RRegulatory action. Under supervision of insurance regulators.
NRNot rated. No opinion is expressed about the firm's financial condition.

Moody's

Grade
Aaa
InterpretationExceptional security. Unlikely to be affected by change.
Aa1/Aa2/Aa3
InterpretationExcellent security. Lower than Aaa because long-term risks appear somewhat larger.
A1/A2/A3
InterpretationGood security. Possibly susceptible to future impairment.
Baa1/Baa2/Baa3
InterpretationAdequate security. Certain protective elements may be lacking.
Ba1/Ba2/Ba3
InterpretationQuestionable security. Ability to meet obligations may be moderate.
B1/B2/B3
InterpretationPoor security. Assurance of punctual payment of obligations is small over the long run.
Caa
InterpretationVery poor security. There may be elements of danger regarding the payment of obligations.
Ca
InterpretationExtremely poor security. Companies are often in default.
C
InterpretationLowest security. Extremely poor prospects of offering financial security.
GradeInterpretation
AaaExceptional security. Unlikely to be affected by change.
Aa1/Aa2/Aa3Excellent security. Lower than Aaa because long-term risks appear somewhat larger.
A1/A2/A3Good security. Possibly susceptible to future impairment.
Baa1/Baa2/Baa3Adequate security. Certain protective elements may be lacking.
Ba1/Ba2/Ba3Questionable security. Ability to meet obligations may be moderate.
B1/B2/B3Poor security. Assurance of punctual payment of obligations is small over the long run.
CaaVery poor security. There may be elements of danger regarding the payment of obligations.
CaExtremely poor security. Companies are often in default.
CLowest security. Extremely poor prospects of offering financial security.

Fitch

Grade
AAA
InterpretationExceptionally strong. Unlikely to be affected by change.
AA+/AA/AA-
InterpretationVery strong. Moderate risk factors. Very strong ability to meet obligations.
A+/A/A-
InterpretationStrong. Moderate risk factors. Strong ability to meet obligations.
BBB+/BBB/BBB-
InterpretationGood. Risk factors may be somewhat high. Good ability to meet obligations.
BB+/BB/BB-
InterpretationModerately weak. Uncertain ability to meeto obligations.
B+/B/B-
InterpretationWeak. Poor ability to meet obligations.
CCC+/CCC/CCC-/CC+/C/C-
InterpretationVery weak. Insurers in any of these ratings viewed as having poor ability to meet obligations.
DDD/DD/D
InterpretationDistressed. Insurers have either failed to meet obligations or are under regulatory supervision/intervention.
NR
InterpretationNot rated.
GradeInterpretation
AAAExceptionally strong. Unlikely to be affected by change.
AA+/AA/AA-Very strong. Moderate risk factors. Very strong ability to meet obligations.
A+/A/A-Strong. Moderate risk factors. Strong ability to meet obligations.
BBB+/BBB/BBB-Good. Risk factors may be somewhat high. Good ability to meet obligations.
BB+/BB/BB-Moderately weak. Uncertain ability to meeto obligations.
B+/B/B-Weak. Poor ability to meet obligations.
CCC+/CCC/CCC-/CC+/C/C-Very weak. Insurers in any of these ratings viewed as having poor ability to meet obligations.
DDD/DD/DDistressed. Insurers have either failed to meet obligations or are under regulatory supervision/intervention.
NRNot rated.

TheStreet.com Ratings, Inc.

Grade
A+/A/A-
InterpretationExcellent financial security. Strong ability to deal with economic adversity.
B+/B/B-
InterpretationGood financial security. Severe economic conditions may effect this company.
C+/C/C-
InterpretationFair financial security. Susceptible to downturns in the economy.
D+/D/D-
InterpretationWeak financial security. Could impact policyholders.
E+/E
InterpretationVery weak financial security. Significant risk, even in a stable economy.
F
InterpretationFailed. Under supervision of state insurance commissioners.
U
InterpretationUnrated.
GradeInterpretation
A+/A/A-Excellent financial security. Strong ability to deal with economic adversity.
B+/B/B-Good financial security. Severe economic conditions may effect this company.
C+/C/C-Fair financial security. Susceptible to downturns in the economy.
D+/D/D-Weak financial security. Could impact policyholders.
E+/EVery weak financial security. Significant risk, even in a stable economy.
FFailed. Under supervision of state insurance commissioners.
UUnrated.

Note: Some of the classifications of the above rating companies are broken down into more levels than illustrated. The financial strength of an insurance company is a very important factor to consider in purchasing life insurance or annuities .

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