A rating of the ability of the insurance company sponsoring the variable policy to pay its claims. Because a policy's subaccounts are invested in a separate account from that of the general insurance company, a low rating does not necessarily imply that investors are likely to lose money if the company is unable to pay its claims. In most cases, however, money invested in a policy's fixed account goes into the general account of the insurance company and may consequently be withheld from the investor.
Benefits
The ratings are useful to both investors concerned about the ability of a sponsor to pay annuitization benefits and to policyholders who put money into fixed accounts.
Origin
These ratings are obtained directly from Fitch, Inc. For more information contact Fitch, 55 East Monroe Street, Chicago, Illinois, 60603. (312) 368-3157.
For the Pros
AAA
Highest claims-paying ability. Risk factors are negligible.
AA+, AA, AA
A+, A, A-
High claims-paying ability. Protection factors are average and there is an expectation of volatility in risk over time due to economic and/or underwriting conditions.
BBB+, BBB, BBB-
Below average claims-paying ability. Protection factors are average. However, there is considerable variability in risk over time due to economic and/or underwriting conditions.
BB+, BB, BB-
Uncertain claims-paying ability and less than investment-grade quality. However, the company is deemed likely to meet these obligations when due. Protection factors will vary widely with changes in economic and/or underwriting conditions.
B+, B, B-
Possessing risk that policy-holder and contract-holder obligations will not be paid when due. Protection factors will vary widely with changes in economic and underwriting conditions, or company fortunes.
CCC
There is substantial risk that policy-holder and contract-holder obligations will not be paid when due. Company has been or is likely to be placed under state department insurance supervision.