The term insurance is defined “n. a system of protection against loss in which a number of individuals agree to pay certain sums (premiums) periodically for a guarantee that they will be compensated under stipulated conditions for any specified loss.” Guarantee is a key word—for an insurance company to guarantee payment it must be financially strong. When purchasing insurance, the consumer needs to understand the industry’s method of tracking financial stability. Here I’ve extracted mission statements or basic facts from the web sites of four popular rating bureaus for the industry.
• A.M. Best Company is a worldwide insurance-rating and information agency with more than 100 years of history. The largest company issuing reports and financial-strength ratings about insurers, its publication and database, Best’s Insurance Reports, offers the largest coverage of insurers worldwide. Our mission statement is to perform a constructive, objective role in serving the insurance marketplace as a source of reliable information and ratings dedicated to encouraging a financially sound industry through the prevention and detection of insurer insolvency.
• Moody’s Investors Service is among the world’s most respected, widely utilized sources for credit ratings, research, and risk analysis. In addition to our core ratings business, Moody’s publishes market-leading credit opinions, deal research, and commentary, serving more than 9,000 customer accounts at some 2,400 institutions around the globe.
Independent credit ratings and research help investors analyze credit risks associated with fixed-income securities, and contribute to efficiencies in fixed-income markets and other obligations, such as insurance policies and derivative transactions, by providing assessments of credit risk. Moody’s default studies validate our predictive ratings. Published research and investor briefings, drawing thousands of attendees each year, keep investors current with the rationale for our credit opinions.
• Standard & Poor’s is one of the world’s preeminent providers of credit ratings, and its financial-market indices, such as the S&P 500®, are globally recognized. We also provide a wide range of other products and services designed to help individuals and institutions around the world make financial decisions. Credit and risk training courses offer participants a better understanding of Standard & Poor’s credit rating and risk management products, tools, and services. This understanding comes from an applied approach using a combination of lectures, discussions, and current case studies, illustrated with practical examples.
• Weiss Ratings is the source for accurate ratings you can rely on to make sound, informed financial decisions. We don’t accept compensation from the companies we rate, nor do we give them an opportunity to preview the ratings or suppress their publication. We’re totally independent and unbiased. Every quarter, we evaluate the financial strength of more than 15,000 institutions. In addition, we track the risk-adjusted performance of over 12,000 mutual funds and more than 9,000 stocks.
I hope this has given you a better understanding of some of the companies that are watching over the insurance industry. Contact your local insurance professional to assist with insuring your assets with the highest-rated insurers. IBI