by John Darer CLU ChFC MSSC CeFT RSP CLTC
Two life insurance companies that issue structured settlement annuities have earned A- or better ratings from Weiss Research
- New York Life Insurance Company A-
- Pacific Life Insurance Company A-
"Weiss insurance ratings outperformed 3 to 1." United States Government Accountability Office (GAO)
Weiss Insurer Reserve Adequacy Index measures the adequacy of the company's reserves and its ability to accurately anticipate the level of claims it will receive. (This factor is measured as a separate index only for property and casualty insurers.)
Weiss Insurer Profitability Index measures the soundness of the company's operations and the contribution of profits to the company's financial strength. The profitability index is a composite of five sub-factors: 1) gain or loss on operations; 2) consistency of operating results; 3) impact of operating results on surplus; 4) adequacy of investment income as compared to the needs of policy reserves (life, health and annuity companies only); and 5) expenses in relation to industry norms for the types of policies that the company offers.
Weiss Insurer Liquidity Index evaluates a company's ability to raise the necessary cash to settle claims and honor cash withdrawal obligations. We model various cash-flow scenarios, applying liquidity tests to determine how the company might fare in the event of an unexpected spike in claims and/or a run on policy surrenders.
Weiss Insurer Stability Index integrates a number of sub-factors that affect consistency (or lack thereof) in maintaining financial strength over time. These sub-factors vary depending on the type of insurance company being evaluated but may include such things as 1) risk diversification in terms of company size, group size, number of policies in force, types of policies written, and use of reinsurance; 2) deterioration of operations as reported in critical asset, liability, income and expense items, such as surrender rates and premium volume; 3) years in operation; 4) former problem areas where, despite recent improvement, the company has yet to establish a record of stable performance over a suitable period of time; 5) a substantial shift in the company's operations; 6) potential instabilities such as reinsurance quality, asset/liability matching, and sources of capital; and 7) relationships with holding companies and affiliates.
