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Resources > Insurance Company Ratings Explained
Because an insurance company’s ratings are an indicator of its financial strength and ability to honor its contractual obligations to policyholders, it should always be considered prior to purchasing any annuity. There are four main rating agencies: A.M. Best, Standard & Poor’s, Moody’s and Fitch. Each of these rating agencies use their own proprietary scale to rate an insurance company. Their rating refers only to the financial strength of the insurance company and is not a recommendation of a particular annuity product. Below you will find a table that outlines each of these four rating agencies letter grade scales and their meaning.
List of Possible Ratings
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| A.M. Best | Standard & Poor's | Moody's | Fitch Ratings | |
|---|---|---|---|---|
| 1. | A++ Superior | AAA Extremely Strong | Aaa Exceptional | AAA Exceptionally Strong |
| 2. | A+ Superior | AA+ Very Strong | Aa1 Excellent | AA+ Very Strong |
| 3. | A Excellent | AA Very Strong | Aa2 Excellent | AA Very Strong |
| 4. | A- Excellent | AA- Very Strong | Aa3 Excellent | AA- Very Strong |
| 5. | B++ Good | A+ Strong | A1 Good | A+ Strong |
| 6. | B+ Good | A Strong | A2 Good | A Strong |
| 7. | B Fair | A- Strong | A3 Good | A- Strong |
| 8. | B- Fair | BBB+ Good | Baa1 Adequate | BBB+ Good |
| 9. | C++ Marginal | BBB Good | Baa2 Adequate | BBB Good |
| 10. | C+ Marginal | BBB- Good | Baa3 Adequate | BBB- Good |
| 11. | C Weak | BB+ Marginal | Ba1 Questionable | BB+ Moderately Weak |
| 12. | C- Weak | BB Marginal | Ba2 Questionable | BB Moderately Weak |
| 13. | D Poor | BB- Marginal | Ba3 Questionable | BB- Moderately Weak |
| 14. | E Under Regulatory Supervision | B+ Weak | B1 Poor | B+ Weak |
| 15. | F In Liquidation | B Weak | B2 Poor | B Weak |
| 16. | B- Weak | B3 Poor | B- Weak | |
| 17. | CCC+ Very Weak | Caa1 Very Poor | CCC+ Very Weak | |
| 18. | CCC Very Weak | Caa2 Very Poor | CCC Very Weak | |
| 19. | CCC- Very Weak | Caa3 Very Poor | CCC- Very Weak | |
| 20. | CC Extremely Weak | Ca Extremely Poor | CC Extremely Weak | |
| 21. | C Lowest | C Distressed |
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COMDEX ranking is a composite of all the ratings that a company has received from A.M. Best, Standard & Poor’s, Moody’s and Fitch. It gives the company’s standing, on a scale of 1-100, in relation to all other companies that have been rated by the rating services. A company needs to be rated by at least two rating services to receive a COMDEX.
Ratings reflect the opinions of the rating agencies and are not implied warranties of an insurance company’s ability to meet its financial obligations to policyholders.
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