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Several major ratings companies in the United States and Canada evaluate insurers and provide information and ratings on financial strength. They are A.M. Best Company, Standard and Poor's, Moody's Investors Service, Duff and Phelps Credit Rating Company, and for Canadian companies only, TRAC Early Warning Solvency Tests.

Each organization employs its own technique for determining the rating of an insurer. Areas considered vary and include leverage, management stability, recent performance and financial situation. External factors such as competition, diversification and market presence can also be considered. Each organization provides a description of its analysis and defines its rating scores.

Here are some of the differences between the companies:

A.M. Best has been providing ratings on virtually all life and health insurance companies for the longest period of time. They bought Toronto-based TRAC Insurance services Ltd. in 1997 and renamed it A.M. Best Canada Ltd.. TRAC became known for calculating eight early warning tests of solvency for Canadian life insurance companies. Each test has an associated tolerance range. If a company's test result falls outside the recommended range in any given year, then that company has failed that test.

A.M. Best Company
Web Site: www.ambest.com
Ambest Road, Oldwick, NJ 08858
Telephone: (908) 439-2200
TRAC Insurance Services A Division of A.M. Best Canada
Web site: www.trac.com/life/consumer.htm
600-133 Richmond St. W Toronto ON M5H 2L3
By Phone or Fax: M - F (9am - 5pm) Tel: (416) 363-8266
Outside Toronto: 1-800-263-8722
Fax: (416) 363-2673
By E-Mail: [email protected]
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Standard and Poor's provides claims-paying ability ratings for those insurers who request and pay for a rating.

Standard and Poor's
Web Site www.standardandpoors.com/ratings
Telephone: (212) 208-1199
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Moody's provides ratings for only those insurers that request a rating. Therefore, ratings from this service are not available for all insurance companies.

Moody's Investors Service
Web Site: www.moodys.com/insurance/index
99 Church Street, New York, NY 10007
Telephone: (800) 811-6980
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Duff and Phelps, like Moody's, provides ratings for those insurers who request a rating and, therefore, ratings from this service are not available for all insurance companies.

Duff and Phelps Credit Rating Co.
Web Site www.dcrco.com
55 East Monroe Street, Suite 3500, Chicago, IL 60603
Telephone: (312) 368-3198
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The quickest way to get current ratings is to contact the life insurance companies directly through their local service office or their Head Office marketing department. To obtain more information on the ratings and the rating companies, check out their web sites.

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Related Topics:
Company Overview