by John Darer® CLU ChFC CSSC RSP
A.M.Best's Insurance Facts and Stats: an introduction to the insurance industry, contains loads of useful information for individual and business consumers of insurance, including structured settlement annuities.
"How secure is my insurance company?" is a common question asked by consumers of structured settlement annuities. The supplement to the November 2011 edition of Best's Review contains an excellent section on "Fiscal Fitness" which helps answer the question and underscores the fact that the U.S. bankruptcy code excludes insurance companies. The supplement discusses how insurance companies are monitored and regulated by state insurance departments.
It is also important to observe that despite the current financial crisis, the number of financially Impaired life and health insurance companies is WELL BELOW the historical average of 25 (the peak was 80 during the 1987-1993 time frame). In 2009 the number was between 10 and 20, yet the number reduced to less than 10 in 2010, although A.M. Best says that there is a time lag in reporting due to the reluctance of state regulators to publicly disclose impairments until they have exhausted all avenues to rehabilitate the insurers or facilitate a sale or merger Source: A.M. Best Special Reports
Top cause of impairment: Inadequate pricing/ loss reserves (as opposed to a catastrophic event). Covers period 1976-2010.
On a positive note, A.M. Best gives a nod to the life insurance industry's strong capital and surplus (emphasis ours). Structured settlement annuities are issued by life insurance companies.
The following insurance groups include current and former structured settlement annuity issuers and are part of A.M. Best's list of the World's Largest Insurers (based on 2009 assets)
3. American International Group, Inc.
6. Aviva plc
7. Met Life Inc.
8. Prudential Financial, Inc.
13.Aegon NV
14. Manulife Financial Corp.
15. ING
20. Hartford Financial Services Group, Inc.
22. Berkshire Hathaway, Inc.
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