Life Insurance Company Ratings 2020

Are you looking for a complete resource to see all the life insurance company ratings 2020? Then you have come to the right place. When looking to purchase a life insurance policy it’s imperative to check the financial rating before moving forward with an insurer.  Knowing the financial rating will provide the knowledge and peace of mind the insurance company is financially sound and will be able to payout a potential future claim.

Table of Contents

What Is A Life Insurance Company Rating?

A life insurance company rating is the financial rating (grade) provided from an independent rating agency. The rating is the agency’s opinion of an insurer’s financial strength and ability to meet its ongoing insurance policy and contract obligations. There are four main rating agencies; A.M. Best, S&P, Moody’s and Fitch. A.M. Best is considered the industry standard.

Life Insurance Company Ratings 2020 Chart

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Why Are Life Insurance Company Ratings Important?

Choosing a life insurance company with a high rating will help ensure the company is financially strong and will have the ability to payout a claim in the future.

How To Read Life Insurance Company Ratings

As seen in the chart above, there are four main rating agencies when it comes to life insurance. The most commonly used and prominent is A.M. Best. This is because A.M. Best only global credit rating agency solely dedicated to the insurance industry. There is also S&P, Moody’s and Fitch. Another important metric to check is the Comdex Score. Below are the rating tables and definitions to help you quickly evaluate the financial strength of a life insurance company.

A.M. Best

Secure	Vulnerable
A++, A+ (Superior)	B, B- (Fair)
A, A- (Excellent)	C++, C+ (Marginal)
B++, B+ (Good)	C, C- (Weak)
	D (Poor)
	E (Under Regulatory Supervision)
	F (In Liquidation)
	S (Suspended)

Fitch Ratings

AAA: Highest credit quality.
‘AAA’ ratings denote the lowest expectation of default risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.

AA: Very high credit quality.
‘AA’ ratings denote expectations of very low default risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.

A: High credit quality.
‘A’ ratings denote expectations of low default risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.

BBB: Good credit quality.
‘BBB’ ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate but adverse business or economic conditions are more likely to impair this capacity.

BB: Speculative.
‘BB’ ratings indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists which supports the servicing of financial commitments.

B: Highly speculative.
‘B’ ratings indicate that material default risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is vulnerable to deterioration in the business and economic environment.

CCC: Substantial credit risk.
Default is a real possibility.

CC: Very high levels of credit risk.
Default of some kind appears probable.

C: Exceptionally high levels of credit risk.
Default is imminent or inevitable, or the issuer is in standstill. Conditions that are indicative of a ‘C’ category rating for an issuer include:

• a. the issuer has entered into a grace or cure period following non-payment of a material financial obligation;
• b. the issuer has entered into a temporary negotiated waiver or standstill agreement following a payment default on a material financial obligation; or
• c. Fitch Ratings otherwise believes a condition of ‘RD’ or ‘D’ to be imminent or inevitable, including through the formal announcement of a distressed debt exchange.

RD: Restricted default.
‘RD’ ratings indicate an issuer that in Fitch Ratings’ opinion has experienced an uncured payment default on a bond, loan or other material financial obligation but which has not entered into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure, and which has not otherwise ceased operating. This would include:

• a. the selective payment default on a specific class or currency of debt;
• b. the uncured expiry of any applicable grace period, cure period or default forbearance period following a payment default on a bank loan, capital markets security or other material financial obligation;
• c. the extension of multiple waivers or forbearance periods upon a payment default on one or more material financial obligations, either in series or in parallel; or
• d. execution of a distressed debt exchange on one or more material financial obligations.

D: Default.
‘D’ ratings indicate an issuer that in Fitch Ratings’ opinion has entered into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure, or which has otherwise ceased business.

Moody’s Investors Service

»Aaa– highest rating, representing minimum credit risk

»Aa1, Aa2, Aa3– high-grade

»A1, A2, A3– upper-medium grade

»Baa1, Baa2, Baa3– medium grade

Standard & Poor’s (S&P)

AAA	An obligation rated ‘AAA’ has the highest rating assigned by Standard & Poor’s. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.
AA	An obligation rated ‘AA’ differs from the highest-rated obligations only to a small degree. The obligor’s capacity to meet its financial commitment on the obligation is very strong.
A	An obligation rated ‘A’ is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor’s capacity to meet its financial commitment on the obligation is still strong.
BBB	An obligation rated ‘BBB’ exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
BB; B; CCC; CC; and C	Obligations rated ‘BB’, ‘B’, ‘CCC’, ‘CC’, and ‘C’ are regarded as having significant speculative characteristics. ‘BB’ indicates the least degree of speculation and ‘C’ the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.
BB	An obligation rated ‘BB’ is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation.
B	An obligation rated ‘B’ is more vulnerable to nonpayment than obligations rated ‘BB’, but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitment on the obligation.
CCC	An obligation rated ‘CCC’ is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.
CC	An obligation rated ‘CC’ is currently highly vulnerable to nonpayment. The ‘CC’ rating is used when a default has not yet occurred, but Standard & Poor’s expects default to be a virtual certainty, regardless of the anticipated time to default.
C	An obligation rated ‘C’ is currently highly vulnerable to nonpayment,and the obligation is expected to have lower relative seniority or lower ultimate recovery compared to obligations that are rated higher.
D	An obligation rated ‘D’ is in default or in breach of an imputed promise. For non-hybrid capital instruments, the ‘D’ rating category is used when payments on an obligation are not made on the date due, unless Standard & Poor’s believes that such payments will be made within five business days in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The ‘D’ rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligation’s rating is lowered to ‘D’ if it is subject to a distressed exchange offer.
NR	This indicates that no rating has been requested, or that there is insufficient information on which to base a rating, or that Standard & Poor’s does not rate a particular obligation as a matter of policy.

Comdex Score

Comdex Ranking

The Comdex score is the average ranking a company receives from the four major rating agencies in America.  The Comdex score is not a rating itself, but rather an unbiased number that can be used to quickly and easily compare the ratings a company has received from the top rating agencies.

How to Read It?

Rather than using letters, Comdex uses numbers on a scale of 1 to 100, with 100 being the best possible score and 1 being the lowest score.  The Comdex ranking is objective and based exclusively on the calculated ratings from the four major rating agencies.

Insurance Rating Services Used in Calculation

Comdex is determined on the evaluations from the following rating services:

• AM Best
• Standard & Poor’s
• Moody’s Investors Services
• Fitch

A company must receive ratings from at least two of the four major rating agencies in order to receive a Comdex score.

Final Thoughts

Always look at the life insurance company ratings 2020 before selecting the insurer that will protect your family or business. A good rule of thumb is to always choose a company with an [A] Excellent rating or better from A.M. Best. By following this axiom, you will have the peace of mind that the industry leading rating agency has assessed that the insurance company has an Excellent or Superior ability to meet their ongoing insurance obligations.

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