There are four ratings agencies you need to be aware of when you are evaluating different insurance companies overall financial health. Understanding the life insurance company ratings will help you make the tough decision on which one of the best life insurance companies available is going to be the right fit for you. The ability of the company you choose to meet financial obligations and pay claims should be a vital ingredient that goes into your final decision making process. Life insurance ratings.
When evaluating a life insurance company’s financial strength, you will notice the financial ratings from the different ratings agencies vary. Be aware that an A+ from one rating agency is not necessarily on par with another ratings agencies A+. That is why we are providing the following life insurance company ratings overview, so we can help you recognize who the strongest rated companies are.
Each of the ratings agencies, A.M. Best, Moody’s, Fitch and Standard and Poor’s are a Nationally Recognized Statistical Rating Organization (NRSRO). The SEC allows NRSROs to offer ratings to insurers that demonstrate the strength of the various insurance companies reserves. These ratings agencies have a high standard to live up to, which should give you some peace of mind about your final decision.
Top 25 Highest Rated Life Insurance Companies
The following list is based on the company’s A.M. Best rating. We also listed the S&P rating, Moody’s rating and Fitch rating of each company where applicable. If a particular rating agency has not given a rating to a carrier below we left that area blank. To the best of our knowledge, all rates are current as of March 2018.
The Comdex rating for life insurance companies is brought to you by EbixExchange. Rather than try and decipher the different financial ratings, EbixExchange decided to create a composite index, which takes the average percentile of the different life insurance company’s financial strength ratings assigned by the different rating services, A.M. Best, Standard & Poor’s, Moody’s Investors Service and Fitch.
A company needs to have at least two ratings form the major ratings agencies in order to have a Comdex rating or ranking. The rankings are on a scale of 1 – 100, and reflect the company’s ranking in relation to other companies that have also been ranked. The closer the Comdex ranking is to 100, the higher that company ranked in relation to its peers.
Rating Services Criteria Used
The top 4 best credit ratings agencies all have different criteria for arriving at the different ratings that they offer. However, some of the main areas of interest the agencies consider are:
The ability of the insurance company to pay existing claims
How well the company is capitalized
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How leveraged the company’s assets are
What investments and risks has the insurer taken on
The type of corporate governance and business structure
How liquid are the company’s assets
If the company has proper risk mitigation in place
These are some ideas on what a different ratings agency might be considering when determining the financial viability of an insurance company. The ratings agencies take the totality of the information and break it down into grades. Each ratings agency has different methodologies and grading scales listed below.
For more on the top rated companies we represent see our articles featuring our favorite:
About A.M. Best Company
Alfred M. Best started the A.M. Best Company in 1899. Part of his goal was to provide financial stability reports on insurance companies. Today, Best’s Credit Ratings are the gold standard when it comes to evaluating insurance provider’s financial strength and credit quality.
AA, Superior (including AA+, AA-)
A, Excellent (including A+, A-)
BBB, Good (including BBB+, BBB-)
CCC, Weak (including CCC+, CCC-)