What Are Annuity Company Ratings?
Annuity company ratings are evaluations provided by independent agencies to assess insurance companies’ financial strength and stability. These ratings are crucial as they help you determine the reliability of an annuity provider, ensuring your investment is secure over the long term. Higher ratings typically indicate a company’s strong financial health and its ability to meet future obligations. Additionally, exploring rate differences shows why two annuities with similar names can produce very different outcomes.
- What they measure: An insurer’s ability to meet obligations to policyholders (financial strength and claims-paying capacity).
- What they don’t measure: Product features, current annuity rates, index crediting potential, service speed, or whether a product is suitable for you.
Why Ratings Matter
- Financial Stability: Annuities are designed to provide income over many years. A highly-rated company is more likely to meet its commitments, providing you with peace of mind.
- Risk Assessment: Ratings can help you gauge the risk associated with different annuity providers. Lower ratings might suggest potential financial difficulties.
- Confidence and Security: Investing with a top-rated company assures you that your future income is protected, enhancing your confidence in your financial planning.
Pro Tip: A high rating is a sign of stability, but it isn’t the only factor you should consider when choosing a carrier. To understand how these scores impact your contract’s long-term guarantees, read our guide on how to use annuity company ratings to protect your retirement principal.
Leading Rating Agencies
- A.M. Best: Specializes in the insurance industry, focusing on financial strength and creditworthiness.
- Standard & Poor’s (S&P): Evaluates the ability of companies to meet financial commitments.
- Moody’s: Assesses the creditworthiness and financial health of insurance companies.
- Fitch Ratings: Provides insights into the financial stability of insurance firms.
- Comdex: Combines ratings from multiple agencies into a single, comprehensive score.
Tip: Each agency uses its own alphabet and cutoffs. There is no official one-to-one “conversion.” Always keep the agency name and effective date with any rating you cite.
Rating Scales Explained
A.M. Best – Best’s Financial Strength Rating (FSR)
- A++ / A+ = Superior
- A / A- = Excellent
- B++ / B+ = Good
- B / B- = Fair
- C++ / C+ = Marginal
- C / C- = Weak
- D = Poor
S&P – Insurer Financial Strength (IFS)
- AAA = Extremely strong capacity
- AA = Very strong
- A = Strong
- BBB = Adequate
- BB / B / CCC / CC / C = Vulnerable/speculative
- D = In default
Moody’s – Insurance Financial Strength (IFS)
- Aaa = Highest quality
- Aa = High quality
- A = Upper-medium
- Baa = Medium grade
- Ba / B / Caa / Ca / C = Speculative to poor
Fitch – Insurer Financial Strength (IFS)
- AAA = Highest credit quality
- AA = Very high
- A = High
- BBB = Good
- BB / B / CCC / CC / C = Speculative to very high risk
- RD / D = Restricted default / Default
What is a Comdex Score?
- Comdex is a 1–100 percentile ranking that aggregates an insurer’s ratings from multiple agencies into a single “how they stack up” number.
- A Comdex of 85 means the company ranks higher than 85% of rated insurers.
- Comdex is a ranking, not a rating. Keep using the original agency symbols alongside it.
How To Use Ratings In Research
- Check the date and company outlook. Ratings can change. Note the effective date and whether the outlook is positive, stable, or negative.
- Prefer multiple agencies. A-range ratings across several agencies show broader third-party validation.
- Look for stability. Long periods of stable or positive outlooks can matter as much as the letter itself.
- Avoid over-weighting tiny differences. A.M. Best A vs. A- or S&P AA- vs. A+ is rarely decisive on its own.
- Remember the impairment context. Lower categories carry higher historical impairment risk, but history is not destiny.
What Ratings Can’t Tell You
- Product mechanics: An A+ rating doesn’t guarantee the highest payout. You still need to check live numbers—for example, comparing current athene annuity rates—alongside caps, participation rates, spreads, rider fees, and surrender terms.
- Service experience: Call center responsiveness, new-business turnaround times, and beneficiary processing.
- Suitability: Your time horizon, liquidity needs, tax status, and whether you need guaranteed lifetime income.
Top-Rated Annuity Companies We Like
Here is a list of some of the top-rated annuity companies based on the latest ratings from A.M. Best, S&P, Moody’s, and Fitch:
- Midland National Life Insurance Company: A.M. Best: A+ | S&P: A+ | Moody’s: A2 | Fitch: A+
- North American Company for Life and Health: A.M. Best: A+ | S&P: A+ | Moody’s: A2 | Fitch: A+
- Nationwide Life & Annuity Insurance Company: A.M. Best: A+ | S&P: A+ | Moody’s: A1 | Fitch: A+
- Allianz Life Insurance Company of North America: A.M. Best: A+ | S&P: AA | Moody’s: Aa3 | Fitch: AAA
- MassMutual: A.M. Best: A++ | S&P: AA+ | Moody’s: Aa3 | Fitch: AA+
Conclusion: Use Ratings As Your First Screen—Not Your Final Decision
Financial strength ratings matter because they signal an insurer’s ability to keep promises through good and bad markets. As a baseline, we generally recommend working with carriers that hold A.M. Best ratings of A- or higher. That threshold helps reduce impairment risk and keeps the focus on stable, well-capitalized companies.
That said, ratings are only table stakes. They don’t tell you whether a specific annuity fits your goals, timeline, or liquidity needs. A well-rated issuer can still offer a product that’s wrong for you if, for example, the surrender schedule is too long, the liquidity is too tight, the rider costs don’t pencil out, or the income start date doesn’t match your plan.
How to apply ratings the right way
- Start with strength: Filter to A.M. Best A- or better; then note outlooks and dates.
- Cross-check, don’t “convert”: Look at multiple agencies when available; keep each symbol in its own scale.
- Focus on fit: Evaluate surrender terms, liquidity windows, rider fees/benefits, income timing, death-benefit options, and tax treatment relative to your situation.
- Re-verify over time: Recheck ratings when making large additions or before activating income.
Next Steps
At The Annuity Expert, we’re an independent annuity broker. We only recommend carriers rated A- or better by A.M. Best, and we’ll help you verify ratings, explain outlooks/dates, and compare options that match your liquidity and income goals. Want a second set of eyes? Contact us to compare quotes and get a no-pressure review of your short list.
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Questions From Our Readers
What are annuity insurance company ratings?
Annuity insurance company ratings are a valuable tool for individuals seeking to invest in annuities. These ratings assess the financial strength and stability of insurance companies, helping consumers make informed decisions. By considering the ratings provided by reputable agencies such as Standard & Poor’s or A.M. Best, investors can choose an annuity provider with confidence.
What are the S&P annuity ratings?
S&P’s rating system ranges from AAA (highest) to R (lowest) and uses letter grades. For example, a company with an AAA rating demonstrates a solid ability to fulfill its obligations consistently over an extended period.
Why are some insurance companies not rated by AM Best?
Some insurance companies do not participate in the voluntary rating system because they already comply with state regulations, guidelines, and audits, making the rating process unnecessary.
How many annuity companies are there in the US?
In 2023, there are 673 Life Insurance and annuities businesses in the US, a 1.6% increase from the number of businesses present in 2022.
What are AAA-rated annuity companies?
The highest long-term investment rating from all three rating agencies is AAA (Triple A), also considered the safest rating.
What is the financial strength of an annuity?
Financial strength is measured by the company’s assets, liabilities, and overall financial stability. For example, a financially strong insurance company is less likely to go bankrupt or become insolvent, which is crucial for long-term policies such as annuities.
What are Nassau annuity ratings?
Nassau Annuity Ratings are a reliable measure of an annuity provider’s financial strength and ability to fulfill its obligations to policyholders. These ratings, assigned by independent rating agencies, assess factors such as the company’s stability, claims-paying ability, and investment performance. It is advisable to consider these ratings when choosing an annuity to ensure financial security and peace of mind.
What is a variable annuity rating?
A variable annuity rating provides investors with an assessment of the performance and stability of a specific variable annuity product. It evaluates factors such as investment options, fees, and financial strength of the issuing company. Investors can use these ratings to make informed decisions and choose the most suitable variable annuity for their needs.
What are Moody’s annuity ratings?
Moody’s annuity ratings are a measure of the financial strength and stability of an annuity provider. These ratings assess the ability of the company to meet its obligations to policyholders, taking into account factors such as investment performance, risk management, and capital adequacy. Investors can use Moody’s ratings to evaluate the creditworthiness of annuity issuers.
What do Morningstar annuity ratings measure?
Morningstar annuity ratings are a widely recognized measure of the performance and quality of annuity products. Morningstar assesses annuities based on factors like fees, performance, and risk, awarding them with ratings ranging from one to five stars. These ratings help investors make informed decisions when choosing annuities.
Is a B++ a Good Annuity Rating?
In the context of A.M. Best’s ratings, a ‘B++’ rating falls under the ‘Good’ category, suggesting that the company can meet its ongoing insurance obligations. While it’s not a cause for alarm, it’s far from the highest rating and indicates a somewhat lower level of security than top-rated firms. Hence, it’s advisable to strive for companies with higher ratings when selecting an annuity, all other things being equal.