Glossary

Financial strength rating

An independent agency's letter-grade opinion of an insurer's ability to pay claims and meet its policy obligations over time.

Also called: insurer rating, claims-paying ability rating, FSR

A financial strength rating is an opinion from a rating agency about how likely an insurance company is to meet its obligations to policyholders. For life insurers, the four main agencies are AM Best, S&P Global Ratings, Moody's and Fitch. Each reviews the insurer's capital, investments, earnings, business mix and management, assigns a letter grade and updates it over time.

The scales differ, so the same letter can mean different things. AM Best's top grade is A++ (Superior), followed by A+ (Superior) and A (Excellent). S&P and Fitch run from AAA downward, and Moody's from Aaa. Hypothetical example: an insurer rated A+ by AM Best, AA- by S&P and Aa3 by Moody's sits near the top of each scale, while a company rated B+ by AM Best falls in that agency's "Good" category, several steps lower. Composite scores such as the comdex combine the ratings into one number.

Ratings matter most for products you will hold for decades, such as permanent life insurance and annuities. They are opinions, not guarantees; they can change; and insurers generally pay to be rated. They say nothing about price or claims service. State guaranty associations provide a backstop up to set limits if an insurer fails. See AM Best, S&P, Moody's and Fitch ratings explained and how to choose a life insurance company.

Last reviewed October 4, 2026

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Related terms

Comdex A 1-to-100 composite that converts an insurer's ratings from several agencies into percentiles and averages them into one strength score. Guaranty association A state safety net, funded by assessments on insurers, that continues coverage or pays claims up to set limits when a life or annuity insurer fails. Reserves Liabilities a life insurer must hold on its balance sheet, as required by state law, to cover future claims and benefits owed on policies in force. Statutory accounting The conservative accounting rules state regulators require insurers to use in filings, built to show whether a company can pay its policyholders. Insurer liquidation A court-ordered process that closes a failed insurer, sells its assets and pays claims, with guaranty associations protecting policyholders up to limits.

Related guides

How to review your life insurance policy every year A yearly check of coverage amount, beneficiaries, premiums, policy values and insurer health, with a step-by-step process and what to act on. How to choose a life insurance company A five-part checklist for picking a life insurer: financial strength, price for your health class, product fit, service and complaints, and who sells it. The Comdex ranking: one number for insurer strength The Comdex blends an insurer's agency ratings into a single 1-to-100 score. How it is calculated, how to read it, and why it should never be your only check. How to compare life insurance quotes fairly Hold coverage, term, health class and riders constant, then compare price, guarantees, conversion rights and insurer strength. Includes a worked checklist. What to compare between term policies besides price Two term policies with the same premium can differ on conversion, renewal, riders and insurer strength. A checklist of what to read before you choose. AM Best, S&P, Moody's and Fitch ratings explained How the four insurer financial strength rating scales work, what each letter means, what a rating cannot tell you, and how to look up and read one.

Related insurers

AAA Life The life insurer of the AAA motor club federation, based in Livonia, Michigan, selling term, whole life, final expense and annuities to AAA members and others. Aflac The supplemental insurer known for its duck; sells term, whole and final expense life mainly at the workplace, alongside cancer, accident and hospital plans. American National Texas insurer founded in 1905, owned by Brookfield since 2022; it stopped selling most new life policies in 2025 and now focuses on annuities. Cincinnati Life Life insurer of Cincinnati Financial, selling term, whole life, universal life, worksite coverage and fixed annuities through independent agents. Everlake Life The former Allstate Life Insurance Company, sold to Blackstone funds in 2021. It services about 1.5 million Allstate-era policies and sells no new ones. F&G Annuities & Life A Des Moines annuity and indexed universal life insurer, publicly traded as FG and about 70% owned by Fidelity National Financial, sold through agents.

Related annuity companies

F&G Annuities & Life Des Moines annuity specialist about 70% owned by Fidelity National Financial, selling fixed indexed annuities, MYGAs and a RILA through agents.

Related tools

Life insurer comparison tool Filter the 100 largest U.S. life insurers by name, type and AM Best rating, then compare up to three side by side using their profile data. Annual life insurance policy review checklist A 16-item yearly checklist covering coverage, beneficiaries, cash value policies and paperwork, to run each year or after a major life change. Life insurance quote comparison worksheet Enter up to four quotes to see cost per $1,000 of coverage and total cost over the term, with flags for differences that matter besides price.