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 If you are unable to find them, or if the ratings in your library are outdated, you can contact the services directly.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.

Douglas R. Peete is licensed in AZ, CA, CO, FL, GA, ID, IN, KS, KY, MI, MO, MS, NC, NE, NJ, NM, NV, NY, PA, SC, TN, TX, and WI to offer insurance products, and life insurance (including variable life), annuities (including variable annuities), and is securities registered in AR. AZ, CA, CO, FL, GA, IA, IL, IN, KS, KY, MA, MD, MI, MN, MO, NC, NE, NH, NJ, NV, NY, OH, OK, PA, RI, SC, TX, UT, VA, WA, and WI and adviser registered in KS. Jonathan Potter is licensed in KS to offer insurance products, and life insurance (including variable life), annuities (including variable annuities), and is securities registered in KS and MO. Nikki Carpenter and Terry Gaumer are securities registered in KS and MO.

IMPORTANT CONSUMER INFORMATION: Douglas R. Peete, Jonathan Potter, Nikki Carpenter, and Terry Gaumer may only transact business in a particular state after licensure or satisfying qualifications requirements of that state, or only if he or she is excluded or exempted from the state's registration requirements. Follow-up, individualized responses to consumers in a particular state by Douglas, Jonathan, Nikki or Terry that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, shall not be made without first complying with the state's requirements, or pursuant to an applicable state exemption or exclusion. For information concerning the licensure status or disciplinary history of a broker-dealer, investment adviser, BD agent or IA representative or any financial institution he or she represents, contact your state securities law administrator.

Insurance products from the Principal Financial Group® are issued by Principal National Life Insurance Company (except in New York), Principal Life Insurance Company and the companies available through the Preferred Product Network, Inc. Securities and advisory products offered through Princor Financial Services Corporation, 800/247-1737, member SIPC. Principal National, Principal Life, the Preferred Product Network, and Princor® are members of the Principal Financial Group®, Des Moines, IA 50392. Douglas R. Peete, Principal National and Principal Life Financial Representative, Princor Registered Representative, Financial Advisor. Jonathan Potter, Principal National and Principal Life Financial Representative, Princor Registered Representative. Nikki Carpenter and Terry Gaumer, Princor Registered Representatives. Douglas R. Peete & Associates is not an affiliate of any company of the Principal Financial Group®.

Group Benefit Plans and Administrative Services from Douglas R. Peete & Associates are not provided by any company of the Principal Financial Group®.

Principal Life maintains certificates of authority to transact insurance in all 50 states. Principal Life NAIC identification number is 61271. Principal National NAIC identification number is 71161.