How Can I Determine the Financial Strength of My Insurance Company?

How do you compare life insurance companies? What features do you examine? What criteria do you use? How do you know what to look for? Making sure that your insurance company is financially sound is an important part of helping to ensure family security.

Fortunately, there are a number of independent companies that make these evaluations. These rating companies carefully examine each insurance company in the areas of profitability, debt, liquidity, and other factors. From the results of these examinations, they then issue overall ratings.

Looking up a company’s rating will provide you with a snapshot of that company’s financial health. Tracking the company’s rating on a regular basis may give you some advanced warning of trouble.

The four most prominent rating companies are A.M. Best, Standard & Poor’s, Moody’s Investors Service, and Fitch Ratings. Each of these services uses slightly different criteria when rating companies. As a result, each may have a slightly different view of a given company. A.M. Best ratings are based on financial conditions and performance; Moody’s, Fitch Ratings, and Standard & Poor’s ratings are based on claims-paying ability.

You should be able to find copies of at least one of these ratings in the reference section of your local library. If you are unable to find them, or if the ratings in your library are outdated, you can contact the services directly. All four services will provide ratings over the phone.

A.M. Best Company: 908-439-2200, www.ambest.com

Standard & Poor’s: 877-772-5436, www.standardandpoors.com

Moody’s Investors Service: 212-553-0377, www.moodys.com

Fitch Ratings: 800-893-4824, www.fitchratings.com

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2012 Emerald Connect, Inc.

*James B. Rawlings, CFP is a Registered Representative of and offers securities through Royal Alliance Associates, Inc. Member FINRA/SIPC, a registered investment advisor. In this regard, this communication is strictly intended for individuals residing in the states of Utah,Arizona, Idaho, Missouri, Nevada,Oregon, Washington. No offers may be made or accepted from any resident outside the specific state(s) referenced. James is also separately registered as an investment adviser representative of OakBridge Asset Management, LLC, a registered investment advisor, offering Advisory and Insurance services in the state of Utah, and Adivsory services only in Washington and Missouri. As such, these services are strictly intended for individuals residing in these states. Additional Advisory services offered through Royal Alliance Associates, Inc., a Registered Investment Advisor. OakBridge and Royal Alliance Associates, Inc., are not affiliated. 897 Baxter Dr. South Jordan UT 84095 801.327.7222 IMPORTANT CONSUMER INFORMATION: A broker-dealer, investment adviser, BD agent, or IA rep may only transact business in a state if first registered, or is excluded or exempt from state broker-dealer, investment adviser, BD agent or IA rep registration requirements, as appropriate. Follow-up, individualized responses to persons in a state by such a firm or individual that involve either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without first complying with appropriate registration requirement, or an applicable exemption or exclusion. For information concerning the licensing status or disciplinary history of broker-dealer, investment adviser, BD agent, or IA rep, a consumer should contact his or her state securities law administrator.