Site Search
Main Insurance Articles Other Insurance Agencies Credit Ratings


Insurance Agencies Credit Ratings


  • Independent agencies regard the financial strength of an insurance companies. The credit rating of an insurance company indicates its ability to pay policyholders’ claims. It does not indicate how well the insurance company’s securities are likely to perform for investors.
                                 

    Insurance Agencies Credit Ratings

     
    However, an insurance company’s credit rating is considered an opinion, not a fact, and ratings of the same insurance company can differ among rating agencies. Usually, four independent agencies—A.M. Best, Fitch, Moody’s and Standard & Poor’s—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.
    You should consider a company’s rating from two or more agencies before choosing whether to buy or keep a policy from that company. It’s also recommended to check annually on the ratings of any company you’re interested in. Insurance companies are also likely to highlight a higher rating from one agency and ignore a lower one from another agency, or select the most favorable comments from a rating agency’s report. So, check the ratings from more than one independent agency.
    It is important to point out, that credit ratings are opinions of each agency with respect to specific securities and contractual financial obligations and the issuer’s ability and willingness to meet those obligations when due. Neither insurer financial strength nor credit ratings are statements of fact nor are they recommendations to purchase, hold or sell any security, contract or policy. Each rating should be evaluated independently of any other rating.

    Insurance Agencies Credit Ratings