Every ratings agency we reviewed did what they said they would do, which is to describe the financial strength of companies. But as we laid out in page 1, there are also other considerations for the consumer, besides the insurer's bank balance. Companies with a higher financial strength may not have the most competitive premiums, or the highest claims pay outs. So do not use financial ratings as your sole reason for switching carriers.
AM Best: Their guide says "Financial ratings have become a strategic requirement for insurers." This can simply mean that paying an "independent" rating agency is a good PR move. Page 2 of their "about our ratings" page (in .pdf) says:
"A.M. Best, founded in 1899 with the sole
purpose of providing service to the insurance
industry..."
A++, A+ Superior
A, A- Excellent
B++, B+ Very Good
B, B- Fair
C++, C+ Marginal
C, C- Weak
D Poor
E Under Regulatory Supervision
F In Liquidation
S Rating Suspended
Moodys has it's "Insurance Financial Strength Ratings" which are "the ability of insurance companies to repay punctually senior policyholder claims and obligations." It would be great if they also other topics, like premiums, service or if the claim payout ratios to premium.
"Moody’s provides both debt ratings and financial strength ratings for life
and P&C insurance companies."
Ratings are as follows:
Aaa Exceptional
Aa Excellent
A Good
Baa Adequate
Vulnerable Companies
Ba Questionable
B Poor
Caa Very Poor
Ca Extremely Poor
C Lowest
Standard and Poors focuses on credit worthiness.
They have Insurer Financial Strength and Financial Enhancement Ratings available.
Ratings are as follows:
AAA Extremely Strong
AA Very Strong
A Strong
BBB Adequate
BB Less vulnerable
B More vulnerable
CCC Currently vulnerable
CC Currently highly vulnerable
R regulatory supervision
N.R. not rated.
Weiss ratings are of most benefit to investors, creditors, or the insurers themselves: those who are selecting or monitoring an auto insurer for financial investment.
Weiss Investment Ratings are not "buy" or "sell" recommendations like those issued by a brokerage firm. Rather, the ratings indicate our opinion regarding an investment's valuation level and prospective risk-adjusted performance relative to other similar-type investments.
Ratings are as follows:
A+/A/A- Excellent financial security
B+/B/B- Good financial security
C+/C/C- Fair financial security
D+/D/D- Weak financial security
E+/E Very weak financial security
F Failed.
Fitch Ratings, formed by the merger of Duff & Phelps Credit Rating Co. (DCR) and Fitch IBCA. They are a broad based rating agency, covering Financial Institutions, Banks, Corporations, Loan Products, Structured Finance, Insurance, Sovereigns and Public Finance markets worldwide. They have simplified the ratings with a special Seal which means the company is A- or higher.
Fitch Ratings introduced the Fitch Ratings Security Seal in October 2000 to augment its Insurer Financial Strength ratings. Insurers that have earned the right to display the Fitch Ratings Security Seal may incorporate the seal in advertising or other marketing literature. Fitch Ratings will display the seal on the front page of reports it writes on these insurers
Maybe there could be favorites with Fitch if the Insurer "maintain's a fully interactive ratings process" with the company.
In the regards to auto insurance, they North American property/casualty insurers.
