There are four ratings agencies you need to be aware of when you are evaluating the best life insurance companies in terms of overall financial health. Understanding the life insurance company ratings will help you make the tough decision on which one of the many life insurance companies available is going to be the right fit for you.
The ability of the company you choose to meet financial obligations and pay claims should be a vital ingredient that goes into your final decision making process. When evaluating a life insurance company’s financial strength, you will notice the financial ratings from the different ratings agencies vary.
Be aware that an A+ from one rating agency is not necessarily on par with another ratings agencies A+. That is why we are providing the following life insurance company ratings overview, so we can help you recognize who the strongest rated companies are.
Each of the ratings agencies, A.M. Best, Moody’s, Fitch and Standard and Poor’s are a Nationally Recognized Statistical Rating Organization (NRSRO). The SEC allows NRSROs to offer ratings to insurers that demonstrate the strength of the various insurance companies reserves. These ratings agencies have a high standard to live up to, which should give you some peace of mind about your final decision.
Highest Rated Life Insurance Companies
The top 25 best rated companies below are chosen by us based on the company’s A.M. Best rating. We also listed the S&P rating, Moody’s rating and Fitch rating and COMDEX ranking of each company, where applicable. and reflect many of the companies that we write policies for.
What you won’t find on this list is some of the top rated companies that do not sell individual life insurance, or are lesser known captive companies.
If a particular rating agency has not given a rating to a carrier below we left that area blank.
To the best of our knowledge, all ratings are current as of February 2023.
| Company | A.M. Best | S&P | Moody's | Fitch | COMDEX Ranking |
|---|---|---|---|---|---|
| Northwestern Mutual | A++ | AA+ | Aaa | AAA | 100 |
| New York Life | A++ | AA+ | Aaa | AAA | 100 |
| Thrivent Life | A++ | N/A | N/A | ||
| Mass Mutual | A++ | AA+ | Aa3 | AA+ | 98 |
| State Farm | A++ | AA | Aa1 | 98 | |
| Guardian Life | A++ | AA+ | Aa2 | AA+ | 98 |
| Minnesota Life | A+ | AA- | Aa3 | AA | 96 |
| State Life Insurance Company | A+ | AA- | 96 | ||
| Lafayette Life | A+ | AA- | AA | 96 | |
| Securian | A+ | AA- | Aa3 | AA | 96 |
| MetLife | A+ | AA- | Aa3 | AA- | 95 |
| Allianz Life | A+ | AA | 94 | ||
| Prudential Pruco | A+ | AA- | Aa3 | AA- | 95 |
| Banner Life | A+ | AA- | AA- | 94 | |
| John Hanco*ck | A+ | AA- | A1 | AA- | 93 |
| Lincoln National | A+ | AA- | A1 | A+ | 91 |
| Principal Life | A+ | A+ | A1 | AA- | 90 |
| Pacific Life | A+ | AA- | A1 | AA- | 93 |
| Protective Life | A+ | AA- | A1 | A+ | 92 |
| Nationwide Life | A+ | A+ | A1 | 90 | |
| Penn Mutual | A+ | A+ | Aa3 | 93 | |
| Mutual of Omaha | A+ | AA- | A1 | 90 | |
| Transamerica Life | A | A+ | A1 | 84 | |
| Ameritas | A | A+ | 83 | ||
| American General | A | A+ | A2 | A+ | 82 |
About Comdex Ranking
The Comdex rating for life insurance companies is brought to you by EbixExchange.
Rather than try and decipher the different financial ratings, EbixExchange decided to create a composite index, which takes the average percentile of the different life insurance company’s financial strength ratings assigned by the different rating services, A.M. Best, Standard & Poor’s, Moody’s Investors Service and Fitch.
A company needs to have at least two ratings form the major ratings agencies in order to have a Comdex rating or ranking.
The rankings are on a scale of 1 – 100, and reflect the company’s ranking in relation to other companies that have also been ranked.
The closer the Comdex ranking is to 100, the higher that company ranked in relation to its peers.
Rating Services Criteria Used
The top 4 best credit ratings agencies all have different criteria for arriving at the different ratings that they offer. However, some of the main areas of interest the agencies consider are:
- The ability of the insurance company to pay existing claims
- How well the company is capitalized
- How leveraged the company’s assets are
- What investments and risks has the insurer taken on
- The type of corporate governance and business structure
- How liquid are the company’s assets
- If the company has proper risk mitigation in place
These are some ideas on what a different ratings agency might be considering when determining the financial viability of an insurance company.
The ratings agencies take the totality of the information and break it down into grades. Each ratings agency has different methodologies and grading scales listed below.
For more on the top rated companies we represent see our articles featuring our favorite:
- Indexed Universal Life Insurance Companies
- Dividend Paying Whole Life Insurance Companies
About A.M. Best Company
Alfred M. Best started the A.M. Best Company in 1899. Part of his goal was to provide financial stability reports on insurance companies.
Today, A.M. Best’s Credit Ratings are the gold standard when it comes to evaluating insurance provider’s financial strength and credit quality.
A.M. Best Company has 15 rating categories, including
- AAA, Exceptional
- AA, Superior (including AA+, AA-)
- A, Excellent (including A+, A-)
- BBB, Good (including BBB+, BBB-)
- BB, Fair (including BB+, BB-)
- B, Marginal (including B+, B-)
- CCC, Weak (including CCC+, CCC-)
- CC, Very Weak
- C, Poor
For more on A.M. Best Company, visit the website here.
About Standard and Poor’s Global Ratings
For over 150 years, Standard and Poor’s ratings have been used to help determine the financial viability of the insurer, particularly regarding its ability to pay all claims under existing contracts, i.e. policies.
S&P Global Ratings is the self proclaimed world’s leading provider of credit ratings and has more than one million credit ratings outstanding.
Standard and Poor’s has 21 rating categories, including:
- AAA, Extremely Strong
- AA, Very Strong
- A, Strong
- BBB, Good
- BB, Marginal
- B, Weak
- CCC, Very Weak
- CC, Extremely Weak
- R, Regulatory Supervision
- NR, Not Rated
In addition to the letter grade provided, plus or minus signs may also follow the ratings. These signs provide additional rating categories within the larger framework of the AA to CCC ratings.
For more on Standard and Poor’s, visit the website here.
About Fitch Ratings
Founded by John Knowles Fitch in 1914, Fitch Ratings is a credit ratings agency, offering financial rating services to companies in over 30 countries.
Fitch ratings include 21 categories, including:
- AAA, Exceptionally Strong
- AA+
- AA, Very Strong
- AA-
- A+
- A, Strong
- A-
- BBB+
- BBB, Good
- BBB-
- BB+
- BB, Moderately Weak
- BB-
- B+
- B, Weak
- B-
- CCC, Very Weak
- CC, Extremely Weak
- C, Distressed
- RD, Restricted Default
- D, Default
For more on FitchRatings, visit the website here.
About Moody’s Investor Service
Founded by John Moody over 100 years ago, Moody’s Investor Service is a part of Moody’s Corporation. Moody’s Investor Service provides credit ratings, research and risk analysis in over 41 countries.
Moody’s has 21 rating categories, including:
- Aaa
- Aa
- A
- Baa
- Ba
- B
- Caa
- Ca
- C
In addition, Moody’s uses either a 1, 2 or 3 to modify the rating. With a modifier of 1 representing a higher rank; a 2 representing a mid-range ranking; and a 3 representing a ranking in the lower end of that particular category.
For example, in addition to the categories above, further enhancement of the ratings for the top level “A” designation would look like this:
- Aaa – Highest Rating
- Aa1 – High-Grade
- Aa2 – High-Grade
- Aa3 – High-Grade
- A1 – Upper-Medium Grade
- A2 – Upper-Medium Grade
- A3- Upper-Medium Grade
- Baa1 – Medium Grade
- Baa2 – Medium Grade
- Baa3 – Medium Grade
- Etc…
For more on Moody’s Investor Services, visit the website here.
Conclusion
Since we place a lot of our clients with permanent life insurance we believe it is essential that we place our clients only into companies that provide A, Excellent financial strength and above. The future financial strength of the company you choose will provide stability and peace of mind in an otherwise unstable world.
