Understanding  Insurance Ratings, and Insurance Rating Companies Even with good life insurance quotes from life insurance companies, your  life insurance is only as good as the company that issues it. So as you study the life insurance quotes from the various life insurance companies, it's wise to make certain that the issuing life insurance company is financially sound. The A.M. Best Company, Standard  & Poor's, and Moody's Investors Services are well-regarded rating companies that provide objective measures of life insurance companies creditworthiness. Here is a sample of their life insurance ratings and what they mean. A.M. Best  Company Standard & Poor's Moody's  Investors Services   The  A.M. Best Company:  A.M. Best is perhaps the best known of all the insurance rating companies. It publishes over 50 different information products about life insurance companies and the insurance industry. Here is an overview of what the A.M.  Best rating system means. The following ratings  are considered "secure" ratings by A. M. BEST: A++  and A+ (Superior): The  company has demonstrated superior overall performance  and has a very strong ability to meet its obligations  to policyholders over a long period of time. A++ and A+ (Superior): A  and A- (Excellent): The  company has demonstrated excellent overall performance  and has a strong ability to meet its obligations to policyholders over a long period of time.  B++ and B+ (Very Good): The  company has demonstrated very good overall performance  and has a good ability to meet its obligations to policyholders over a long period of time. The  following ratings indicate that a company is "vulnerable" to financial difficulties in the future by A. M. BEST: B  and B- (Adequate):  The company has an adequate overall performance and  can meet its obligations to policyholders, but may be  vulnerable to unfavorable changes in underwriting or economic conditions. C++  and C+ (Fair): The  company has demonstrated fair overall performance and  can meet its current obligations to policyholders, but  is vulnerable to unfavorable changes in underwriting  or economic conditions C  and C- (Marginal): The  company has demonstrated marginal overall performance. It can meet its current obligations to policyholders,  but it is very vulnerable to unfavorable changes in underwriting or economic conditions. D  (Very Vulnerable): The  company has demonstrated poor overall performance. The company can meet its obligations to policyholders, but  is extremely vulnerable to unfavorable changes in underwriting  or economic conditions  E (Under State Supervision): The  company is under state insurance regulatory authority supervision, control or restraint, such as conservatorship or rehabilitation, but not including liquidation. This  rating may be assigned if the company is under a cease  and desist order issued by a state regulator other than from its state of domicile. F  (In Liquidation): The  company has been placed under an order of liquidation  by a court of law, or its owners have voluntarily agreed to liquidate. Companies that voluntarily liquidate or dissolve their charters are generally not insolvent. Standard & Poor's: Standard and Poor's rates the claims-paying ability of over  300 insurance organizations worldwide, and monitors public data  on another 2,000 U.S. companies. The  following ratings are considered "secure" ratings by Standard & Poor's: AAA Superior financial security on an absolute and relative basis.  Capacity to meet policyholder obligations is overwhelming  under a variety of economic and underwriting conditions. AA Excellent  financial security. Capacity to meet policyholder obligations is strong under a variety of economic and underwriting  conditions. A  Good financial security, but capacity to meet policyholder obligations is somewhat susceptible to adverse economic  and underwriting conditions. BBB Adequate financial security, but capacity to meet policyholder obligations is susceptible to adverse economic and underwriting  conditions. The  following ratings are considered "vulnerable" ratings by Standard & Poor's: BB Financial  security may be adequate, but capacity to meet policyholder obligations, particularly with respect to long-term or  "long-tail" policies, is vulnerable to adverse economic and underwriting conditions. B Vulnerable financial security. Currently able to meet policyholder  obligations, but capacity to meet policyholder obligations  is particularly vulnerable to adverse economic and underwriting  conditions. CCC Extremely  vulnerable financial security. Continued capacity to meet policyholder obligations is highly questionable unless  favorable economic and underwriting conditions prevail. NR Not  Rated. The insurer is not rated by Standard & Poor's R Regulatory action. As of the date indicated, the insurer is under supervision of insurance regulators following rehabilitation,  receivership, liquidation, or any other action that reflects regulatory concern about the insurer's financial condition. Information on this status is provided by the National Association of Insurance Commissioners and other regulatory bodies. Although believed to be accurate, this information is not guaranteed. The "R" rating does not apply to insurers  subject only to non financial actions such as market conduct  violations. Plus (+) or Minus (-) sign The  ratings from "AA" to "B" may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories. Standard & Poor's ratings  and other assessments of creditworthiness and financial  strength are not a recommendation to purchase or discontinue  any policy or contract issues by an insurer or to buy, hold or sell any security issued by an insurer. In addition,  neither a rating nor an assessment is a guaranty of an insurer's financial strength. Moody's: Moody's Ratings, founded in 1909, rates the financial strength of a variety of investment vehicles and institutions, including  corporate bonds, preferred stock, short-term debt, mutual funds  and insurance companies. The  following ratings are considered "strong" by Moody's: Aaa  Exceptional financial security. While the financial strength of these companies is likely to change, such changes as  can be visualized are most unlikely to impair their fundamentally strong position Aa Excellent  financial security, together with the Aaa group, they  constitute what are generally known as high-grade companies.  They are rated lower than Aaa companies because long-term  risks appear somewhat larger. A Good financial security. However, elements may be present which suggest a susceptibility to impairment sometime in their future. Baa Adequate financial security. However, certain protective elements  may be lacking or may be characteristically unreliable  over any great length of time. The  following ratings are considered "weak" by Moody's: Ba Questionable financial security. Often the ability of these companies  to meet policyholder obligations may be very moderate and thereby not well safeguarded in the future. B Poor financial security. Assurance of punctual payment of policyholder  obligations over any long period of time is small. Caa Very poor financial security. They may be in default on their policyholder obligations or there may be present elements  of danger with respect to punctual payment of policyholder obligations claims. Ca Extremely  poor financial security. Such companies are often in default on their policyholder obligations or have other marked shortcomings C The  lowest rated class of insurance company; can be regarded  as having extremely poor prospects of ever offering  financial security. 1, 2, 3 Modifiers for each generic rating category from Aa to B. 1 indicates that the insurance company ranks  in the higher end of its generic rating category. The modifier 2 indicates a mid-range ranking. The modifier  3 indicates that the company ranks in the lower end of its generic category. Life Insurance Home | FAQ | Glossary | Resources | Cost Risks | Ratings | Quote form | Links