life insurance company ratings

8/14/2019 Life Insurance Company Ratings

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Life Insurance Company Ratings

When investors make the decision to put their money into a life insurance policy or

an annuity, they look at a variety of factors to help them decide which insurance

company can best meet their needs. For example, they might consider the types of

products the company has available, the hard numbers regarding interest rates orrate of return and the comfort they feel with the agent or broker with whom they

would be working.

One factor that is occasionally overlooked during the selection process is a

company’s financial strength. This is not an insignificant consideration. Many of the

investment products sold by life insurance companies are projected to mature 10,

15 or 20 years in the future. So, the investor needs to know that the insurance

company will be in good standing when his investments come to fruition or the

unexpected occurs and times comes to pay up. Fortunately, there are a number of

tools available that can help make assessing a company’s strength quite

manageable.

The Rating Systems

There are four major rating companies and they each approach their mission in

different ways but one criterion that they all place front and center when assigning

a rating is a company’s ability to meet their financial obligations.

A.M. Best – It’s important to note that insurance companies pay A.M. Best for the

privilege of being rated by them. Best’s analysts insist this does not present a

conflict of interest and history bears them out. Beyond financial considerations,

their ratings are based on meetings with management, sitting in on conference calls

and how news events will affect a company. A.M. Best’s highest rating is A++ and

its lowest is F. They are updated between 12 and 36 months.

Fitch – Fitch emphasizes a company’s management team, its decision-making

process and the level of risk to which it is exposed. The ratings are updated

annually and stretch from AAA at the high-end to D on the low end.

Moody’s – Moody’s prefers to use two tiers—a financial and business profile—to rate

companies. Within those tiers are heavily detailed systems that allow the company

to be flexible and make it the only major rating system that does not keep to a

regular schedule. Its scale ranges from AAA to D.

Standard & Poor’s – S & P uses many of the same considerations as the other

agencies. What’s unique about S & P is that it hosts quarterly discussions with the

company’s it rates. Their ratings are updated annually and the scale runs from AAA

to D.

Five of the Best



While there are many good insurance companies offering sophisticated products the

section below lists five of the best according to the rating systems. Obviously, it is in

the investor’s best interest to investigate his insurance company as thoroughly as

possible.

Integrity Life

This company celebrated its 75th anniversary in 2008. Headquartered in Wisconsin,

Integrity Life entered into a partnership with Grange Insurance based out of Ohio in

2002. The partnership allowed Integrity to diversify its product lines to include

personal and commercial products. Integrity also expanded its customer base out to

11 states, which allowed it to disperse risk more evenly resulting in lower rates for

its customers. Grange also helped Integrity ramp up its technological capacity with

its emphasis on innovation. While not as large as some of the other companies

listed here, Integrity is an example of how a well-managed, regional insurer can

succeed in a competitive marketplace.

Mass Mutual

When it was founded in Springfield, Massachusetts in 1851 Mass Mutual’s core

business was whole life. That hasn’t changed in the intervening years. Using the

idea that a person could invest in himself over the course of a lifetime as its

centerpiece, the company has since added a full line of products. Mass Mutual takes

the long term approach to investing which allows its customers to stay reassured

even in times of uncertain economic cycles. In an effort to expand the resources it

makes available to its policyholders, Oppenheimer Funds and Connecticut Mutual

Life Insurance have been added to the Mass Mutual family in recent decades.

MetLife

With its blimp and use of the Snoopy character in its promotional campaigns, Metlife

may be the best known life insurance company in the country. But it didn’t receive

its high ratings solely on the basis of a slick marketing campaign. The company has

been around for over 140 years and has kept its position as a market leader by

offering a variety of portfolio products designed to meet the changing needs of the

marketplace. When Metlife acquired the Traveler’s Group in 2006 it became the

largest provider of individual annuities and the largest life insurer in the country.

The acquisition has made Metlife’s goal of having 100 million customers become a

distinct possibility.

New York Life

New York Life’s slogan, “The Company You Keep” has entered the popular

vernacular but the company has been in existence since the 1840s, the longest of

any of the companies profiled here. New York Life prides itself on being a company

of firsts. It was the first company to issue policies to women at the same rates as



men. It was the first insurer to issue a detailed financial report to its policyholders. It

was the first company to give its customers the “Check-o-matic” option that

eliminated the need to write out checks every month. More recently, New York Life

was the first insurer to offer its customers a web portal. Many of its competitors

have since matched New York Life’s services in this regard.

Pacific Life

Acting as a counter to New York Life on the West coast is Pacific Life. It is the largest

and best-rate insurance company in the Western United States. Founded in 1868 in

Sacramento by former California governor Leland Stanford, Pacific Life has as

diverse a portfolio of products as any of its competitors. A notable landmark in the

company’s history was 1997 when it converted to a mutual insurance company

structure (the benefits of this to policyholders are explained below). Another key

year was 2002 which is when the company entered into the 529 College Savings

Product market and when it issued its first mutual fund.

Two Things to Know

By definition, a life insurance company has less risk than an insurance company

that has property and casualty lines. Property and casualty insurers are affected by

natural disasters and large-scale tragedies in ways that life insurance companies

are not.

Investors should also find out whether or not an insurance company is a mutual

insurer or not. Mutual Insurers are not publicly traded and are therefore immune

from the pressures of having to answer to shareholders. In a mutual insurance

company the policyholders are the owners of the company.

When deciding which company to invest one’s life savings or entrust your family’s

security, it behooves the investor to be informed. The ratings agencies provide a

service that is easy to access and easy to use. Utilizing them serves as a third-party

confirmation tool to an insurance company’s claims of strength and competency.

life insurance company ratings

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