Annuity Ratings: Finding the Best Annuity
Annuity ratings are an important factor in finding the best annuity plans. It’s vitial to your retirement that the insurance company backing the annuity contract is financially sound and stable enough to meet its obligations.
Annuity ratings are provided by several professional ratings organizations, including A.M. Best Company, Moody’s Investors Service, Standard & Poor’s, Fitch, Inc., and Weiss Ratings, Inc. These organizations keep an eye on the financial condition of annuity providers and issue rankings of the firms. It’s always best to select a highly rated insurance firm over one with low ratings.
Annuity Rating Factors
The ratings services usually look at factors that include the ability of an insurer to pay claims, the insurer’s financial strength as measured by the reserves stored to make payouts, the firm's financial history, and the soundness of the insurer’s general account investments. Any signs of insolvency or inability to pay debts earns the insurer a lower rating.
Ratings companies usually assign a letter grade to each insurer evaluated. A.M. Best is the oldest of the ratings services, and it focuses on measuring the relative financial strength of an insurer and its ability to make good on its promises. Letter grades are assigned, ranging from A++ to C-. Fitch and Standard & Poor’s measure the ability of an insurer to pay claims and use a system similar to that for rating bonds, with letter grades ranging from AAA to B-.
Typically, an insurance company with a high ranking at one ratings service will receive a similar rating at another ratings service, but since each service grades with a slightly different rubrick, rankings may vary. It is recommended that you take into account multiple rankings when comparing insurance companies.
Where to Get Annuity Ratings
Experts recommend checking the ratings provided by several ratings firms, since each one has its own methods for ranking the annuity providers, and the ratings companies may disagree. When looking for annuity ratings, choose companies that offer independent research over those that rely on data provided by the annuity sellers themselves.
Below you’ll find the names, website addresses, and telephone numbers of the foremost annuity ratings firms.
- A.M. Best Company Inc.
- Fitch Ratings
- Moody's Investor Services
- Standard & Poor's
- Weiss Ratings
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