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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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Standard
& Poor's: Standard and Poor's rates the claims-paying ability
of over 300 insurance organizations worldwide, and monitors public data
on another 2,000 U.S. companies.
The
following ratings are considered "secure" ratings by Standard
& Poor's:
| AAA |
Superior
financial security on an absolute and relative basis. Capacity to
meet policyholder obligations is overwhelming under a variety of
economic and underwriting conditions. |
| AA |
Excellent
financial security. Capacity to meet policyholder obligations is
strong under a variety of economic and underwriting conditions. |
| A |
Good
financial security, but capacity to meet policyholder obligations
is somewhat susceptible to adverse economic and underwriting conditions. |
The following ratings are considered "vulnerable"
ratings by Standard & Poor's:
| BBB |
Adequate
financial security, but capacity to meet policyholder obligations
is susceptible to adverse economic and underwriting conditions. |
| BB |
Financial
security may be adequate, but capacity to meet policyholder obligations,
particularly with respect to long-term or "long-tail"
policies, is vulnerable to adverse economic and underwriting conditions. |
| B |
Vulnerable
financial security. Currently able to meet policyholder obligations,
but capacity to meet policyholder obligations is particularly vulnerable
to adverse economic and underwriting conditions. |
| CCC |
Extremely
vulnerable financial security. Continued capacity to meet policyholder
obligations is highly questionable unless favorable economic and
underwriting conditions prevail. |
| NR |
Not
Rated. The insurer is not rated by Standard & Poor's. |
| R |
Regulatory
action. As of the date indicated, the insurer is under supervision
of insurance regulators following rehabilitation, receivership,
liquidation, or any other action that reflects regulatory concern
about the insurer's financial condition. Information on this status
is provided by the National Association of Insurance Commissioners
and other regulatory bodies. Although believed to be accurate, this
information is not guaranteed. The "R" rating does not
apply to insurers subject only to non financial actions such as
market conduct violations. |
| Plus
(+) or Minus (-) sign: The ratings from "AA"
to "B" may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.
Standard & Poor's ratings and other assessments of creditworthiness
and financial strength are not a recommendation to purchase or discontinue
any policy or contract issues by an insurer or to buy, hold or sell
any security issued by an insurer. In addition, neither a rating
nor an assessment is a guaranty of an insurer's financial strength. |
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