Ratings

Ratings are a form of financial analysis applied to a variety of corporations, securities, governments and other entities. For example, an insurance company rating is a measure of financial strength and the ability of of an insurance company to meet its obligations. Ratings are provided by third-party rating agencies such as A.M. Best, Standard and Poor’s, Moody’s and Fitch. These third party rating agencies assign grades to the entity or security they are analyzing. For example, high quality, which are considered the least riskiest, get an AAA rating whereas bonds with a BB or less are considered highly risky junk bonds. The lower the rating, the more the issuer has to pay in terms of a coupon rate to attract buyers. Ratings are not static and can be downgraded or upgraded depending on the agency’s appraisal of the issuer’s or entity’s financial health.

Is Your Annuity Safe?

Credit risk or the possibility of company insolvency are top of mind for many people who are considering an annuity purchase. However, as indicated in the Wall Street Journal article referenced below, 90% of policyholders impacted by recent insolvencies have received full benefits--largely through a combination of remaining insurer assets and funds provided by state guaranty associations. Due diligence and--to the extent possible--some comparison shopping are encouraged before purchasing any...

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Any comment on Riversource Life Insur CO? Their AMBest Rating is generally positive but no FDIC insurance makes me nervous

Are you asking from the perspective of a current or prospective policyholder?

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Moody's

Fitch

There are Downsides to Selling Annuities if Your Insurer is Struggling

Even with life and annuity insurers struggling, consumers should think twice and seek sound advice before selling an existing annuity. "Should consumers be worried by declining financial-strength ratings of insurance companies that issue their life policies and annuity contracts? Experts say lowered strength ratings are cause for concern. But they warn that rash action -- like dumping your annuity without doing your homework first -- may subject you to big problems." Source: Wall Street Journal...

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Consumers Need to be on Guard as Life and Annuity Insurers Seek Regulatory Relief on Reserve Requirements

Currrent annuity owners and prospective purchasers need to keep an eye on the financial ratings of annuity providers. "While the biggest financial headlines over the past few months have focused on bailing out banks and other businesses with taxpayer money, many owners of annuities and life insurance are following another rescue attempt, with some bewilderment: efforts by insurers to get tens of billions of dollars in relief from state insurance regulators. The proliferation of relief efforts...

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Annuity