Ratings are assigned to a life insurance company by rating agencies, and are usually expressed as either a letter or a combination of uppercase and lowercase letters and plus or minus signs as modifiers (e.g. AAA, A+, A-, Aa).
Rating agencies assess the financial health and strength of the insurer using multiple different criteria, including assets and liabilities, cash flow, net income, and other data obtained from an insurer’s financial statements. Rating agencies may also analyze the insurer’s balance sheet and current business strategy to assess the future potential health and stability of the insurer.
See: A.M. Best, Fitch, Standard & Poor’s, and Moody’s
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