A common question I receive from affluent clients looking for insurance is “who are your triple A rated life insurance companies?” This question probably derives from the fact that when looking at the credit ratings for large companies such as Microsoft or Amazon or when looking to invest in bonds, The Big Three credit rating agencies– S&P, Moody’s and Fitch are the industry standard. AAA (Triple A) is considered the safest rating (highest) available for the long-term investment from all three rating rating agencies. This article will explain how the insurance industry is different than the other markets and why A.M. Best is a better metric to use when looking at the health of a life insurance company.
Triple A (AAA, Aaa) Rated Life Insurance Companies
- Northwestern Mutual Life Insurance Company (Fitch- AAA Moody’s- Aaa)
- New York Life Insurance Company (Fitch- AAA Moody’s- Aaa)
- TIAA-CREF Life Insurance Company (No longer accepting new life business) (Fitch- AAA Moody’s- Aaa)
In the above list, you can see there are only two active triple A rated life insurance companies in 2020, Northwestern Mutual Life Insurance Company and New York Life Insurance. Correspondingly, there is also only two companies AAA rated on the S&P 500, Johnson & Johnson and Microsoft. However, the life insurance industry uses a fourth rating agency; A.M. Best as their gold standard. This is because A.M. Best is the only global rating agency with a specific focus on the insurance industry. While the other three credit rating agencies are still observed in life insurance, for most industry experts, A.M. Best is the primary and most important rating used.
While the other three credit rating agencies are still observed in life insurance, A.M. Best is considered the gold standard for the insurance industry.
Many of the blue chip life insurance companies such as; Prudential, Pacific Life, MetLife, John Hancock, Mutual of Omaha, Lincoln Financial, Principal, Protective Life, Banner Life, etc. are rated A+ Superior by A.M. Best. These companies are not only in the Superior rating category (Superior is the highest category, same as A++) but will typically have the lowest rates and most favorable underwriting guidelines in the country.
A.M. Best Rating Scale
Click here to see a list of all the current A+ Superior rated life insurance companies
Triple A Rated Life Insurance Companies- Final Thoughts
While a triple A rating is important in the equity and bond markets using the credit rating agencies; S&P, Moody’s and Fitch, it is different for the insurance industry. A.M. Best is the leading rating used for evaluating the financial strength of life insurance companies as they are the only global rating agency dedicated to evaluating the insurance industry. A good rule of thumb is to choose an insurer with an A+ (Superior) rating or better from A.M. Best. This will provide peace of mind the insurer was deemed to be financially strong and be able to pay out a future claim.
Frequently Asked Questions
Use this chart to compare all the life insurance companies and their ratings from the main rating agencies; A.M. Best, S&P, Fitch and Moody’s.
No. As long as you choose an insurer with an A+ rating to better from A.M. Best, you are selecting a company that is in the highest tier of financial strength (Superior) and never failed to pay a valid claim. The A+ rated life insurance companies often have the best rates and underwriting guidelines for term and universal life insurance.
Yes, typically AAA rated life insurance are more expensive than other insurers with an A+ rating from A.M. Best.
Yes, typically the underwriting is more strict on triple A rated life insurance companies compared to A or A+ rated insurers from A.M. Best.