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Understanding
Insurance Ratings and Insurance Rating Companies
Your
long term care insurance is only as good as the company that issues
it. So when you buy long term care insurance, it's wise to make
certain that the issuing company is financially sound. The A.M.
Best Company, Standard & Poor's, and Moody's Investors Services
are well-regarded rating companies that provide objective measures
of insurance companies' creditworthiness. Here is a sample of
their ratings and what they mean.
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The
A.M. Best Company: A.M. Best is perhaps the best known of all the
insurance rating companies. It publishes over 50 different information
products about insurance companies and the insurance industry. Here is
an overview of what the A.M. Best rating system means.
The
following ratings are considered "secure" ratings by A. M. BEST:
| A++
and A+ (Superior): |
The
company has demonstrated superior overall performance and has a
very strong ability to meet its obligations to policyholders over
a long period of time. |
| A
and A- (Excellent): |
The
company has demonstrated excellent overall performance and has a
strong ability to meet its obligations to policyholders over a long
period of time. |
| B++
and B+ (Very Good): |
The
company has demonstrated very good overall performance and has a
good ability to meet its obligations to policyholders over a long
period of time. |
The following ratings indicate that a company
is "vulnerable" to financial difficulties in the future by A.
M. BEST:
| B
and B- (Adequate): |
The
company has an adequate overall performance and can meet its obligations
to policyholders, but may be vulnerable to unfavorable changes in
underwriting or economic conditions. |
| C++
and C+ (Fair): |
The
company has demonstrated fair overall performance and can meet its
current obligations to policyholders, but is vulnerable to unfavorable
changes in underwriting or economic conditions. |
| BC
and C- (Marginal): |
The
company has demonstrated marginal overall performance. It can meet
its current obligations to policyholders, but it is very vulnerable
to unfavorable changes in underwriting or economic conditions. |
| D
(Very Vulnerable): |
The
company has demonstrated poor overall performance. The company can
meet its obligations to policyholders, but is extremely vulnerable
to unfavorable changes in underwriting or economic conditions. |
| E
(Under State Supervision): |
The
company is under state insurance regulatory authority supervision,
control or restraint, such as conservatorship or rehabilitation,
but not including liquidation. This rating may be assigned if the
company is under a cease and desist order issued by a state regulator
other than from its state of domicile. |
| F
(In Liquidation): |
The
company has been placed under an order of liquidation by a court
of law, or its owners have voluntarily agreed to liquidate. Companies
that voluntarily liquidate or dissolve their charters are generally
not insolvent. |
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