A Comprehensive Guide to Annuity Companies: Ratings, Interpretations, and Selections

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Annuity Companies
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Introduction

Annuities are long-term investment vehicles designed to provide a steady income stream during retirement. Selecting the right annuity company is crucial to ensure your financial stability and achieving your long-term goals. This detailed guide will discuss the ins and outs of annuity companies, including their ratings, how to interpret these ratings, and how to select the right company for your needs. We will also provide a comprehensive list of annuity companies to help you make an informed decision.

List of Annuity Companies

Here’s a list of annuity companies in the market today, along with a brief description of their history and product offerings:

Company NameAM BestMoody’sS&P FoundedAnnuities OfferedCustomer Service Number
Allianz LifeA+A1AA1896Fixed, Variable, Indexed, Immediate1-800-950-5872
AIGAA2A+1919Fixed, Variable, Indexed, Immediate1-800-445-7862
American EquityA-Baa1BBB+1995Fixed, Indexed1-888-221-1234
American Life and SecurityB++Not RatedNot Rated1960Fixed, Indexed, Immediate(402)-489-8266
American NationalANot RatedA1905Fixed, Indexed, Immediate1-800-899-6806
AmericoANot RatedNot Rated1946Fixed, Indexed, Immediate(800) 231-0801
AtheneAA3A2009Fixed, Indexed, Immediate1-888-266-8489
Atlantic Coast LifeB++Not RatedNot Rated1925Fixed, Indexed, Immediate(844) 442-3847
AXA EquitableAA2A1859Fixed, Variable, Indexed, Immediate1-800-352-5252
Brighthouse FinancialAA3A+2016 (spin-off from MetLife)Fixed, Variable, Indexed, Immediate1-800-882-1292
Clear Spring Life and Annuity CompanyA-Not RatedNot Rated1985Fixed, Indexed, Immediate(800) 990-7626 
Delaware LifeA-Not RatedBBB+2013Fixed, Variable, Indexed1-877-253-2323
EquiTrust LifeB++Not RatedBBB+1966Fixed, Variable, Indexed(866) 598-3692
Fidelity & GuarantyA-Baa1A-1959Fixed, Variable, Indexed1-888-513-8797
First Symetra National Life Insurance of NYANot RatedA1990Fixed, Variable, Indexed1-800-796-3872
Genworth Life Insurance Co.C++Not RatedNot Rated1871Fixed, Variable, Indexed(888)-436-9678
Global AtlanticAA3A2004Fixed, Variable, Indexed, Immediate1-877-454-4777
Guaranty Income LICB++Not RatedNot Rated1926Fixed, Variable, Indexed(800)-535-8110
Great American Insurance GroupA+A1A+1872Fixed, Indexed, Immediate1-800-854-3649
Guardian Insurance & Annuity Co.A++Aa2AA+1860Fixed, Indexed, Immediate(888)-482-7342
Integrity LIC (Western and Southern Financial Group Affiliate Company)A+Aa3AA-1966Fixed, Indexed, Immediate(800)-325-8583
Investors HeritageB++Not RatedNot Rated1960Fixed, Indexed, Immediate(800)-422-2011
Jackson National LifeAA2A1961Fixed, Variable, Indexed, Immediate1-800-644-4565
Kansas City Life Insurance CompanyA-Not RatedNot Rated1895Fixed, Variable1-800-821-6164
Liberty Bankers LifeInsurance CompanyA-Not RatedNot Rated1958Fixed, Indexed1-800-274-4829
Life Insurance Company of the Southwest (National Life Group Affiliate Company)A+A1A+1955Fixed, Indexed, Immediate(800)-732-8939
Lincoln Financial GroupA+A1AA-1905Fixed, Variable, Indexed, Immediate800-454-6265
MassMutualA++Aa3AA+1851Fixed, Variable, Immediate, Deferred1-800-272-2216
MetLifeA+Aa3AA-1868Fixed, Variable, Indexed, Immediate1-800-638-5433
Midland National Life Insurance CompanyA+A2A+1906Fixed, Indexed, Immediate1-800-923-3223
Minnesota Life (Securian Financial Affiliate Company)A+Aa3AA-1880Fixed, Variable, Indexed, Immediate1-833-810-8260
Mutual of OmahaA+A1A+1909Fixed, Indexed, Immediate1-800-775-6000
Nassau Life and Annuity CompanyB++Not RatedNot Rated1851Fixed, Variable, Indexed, Immediate(800) 541-0171
National Life GroupA+AA-Aa31848Fixed, Indexed, Variable1-800-732-8939
NationwideA+A1A+1926Fixed, Variable, Indexed, Immediate1-877-669-6877
New York LifeA++AaaAA+1845Fixed, Variable, Immediate, Deferred1-800-225-5695
Oceanview Life and Annuity CompanyA-Not RatedNot Rated1965Fixed, Variable, Immediate, Deferred1-833-656-7455
OneAmericaA+A1AA-1877Fixed, Immediate1-800-537-6442
Oxford Life Insurance CompanyANot RatedNot Rated1965Fixed, Indexed(866) 641-9999
Pacific LifeA+Aa3AA-1868Fixed, Variable, Indexed, Immediate1-800-800-7646
Pacific Guardian LICANot RatedA1961Fixed, Variable, Indexed, Immediate(800) 367-5354
Penn MutualA+Aa3A+1847Fixed, Variable, Indexed, Immediate(215) 956-8000
Principal Financial GroupA+Aa3A+1879Fixed, Variable, Indexed, Immediate1-800-986-3343
Protective LifeA+A1AA-1907Fixed, Variable, Indexed, Immediate1-800-866-9933
Prudential FinancialA+A1AA-1875Fixed, Variable, Indexed, Immediate1-800-778-2255
RiverSourceA+Aa3A+1894Fixed, Variable, Immediate1-800-862-7919
Reliance StandardA++A2A+1907Fixed, Indexed1-800-351-7500
Sagicor Life Insurance CompanyA-Not RatedNot Rated1840Fixed, Indexed(246) 467-7500
SBLIANot RatedA-1907Fixed, Indexed888-630-5000
Securian FinancialA+Aa3AA-1880Fixed, Variable, Indexed, Immediate1-800-233-2881
Sentinel Security LifeB++Not RatedNot Rated1948Fixed, Variable, Indexed, Immediate(800) 247-1423 
SILACB+Not RatedNot Rated1935Fixed, Variable, Indexed, Immediate(800) 352-5150
The Standard Insurance CompanyAA1A+1906Fixed, Variable, Indexed, Immediate(800) 378-4578
SymetraAA1A1957Fixed, Variable, Indexed, Immediate1-800-796-3872
TIAAA++Aa1AA+1918Fixed, Variable, Immediate, Deferred1-800-842-2252
Thrivent FinancialA++Aa3AA1902Fixed, Variable, Indexed, Immediate1-800-847-4836
TransamericaAA1A1904Fixed, Variable, Indexed, Immediate1-800-797-2643

Company Ratings

The financial strength of an annuity company is crucial in determining its ability to fulfill its obligations to policyholders. Ratings agencies such as A.M. Best, Moody’s, Standard & Poor’s (S&P), and Fitch assess and rate insurance companies based on their financial strength, creditworthiness, and claims-paying ability.

Here is a table listing the ratings assigned by A.M. Best, Moody’s, S&P, and Fitch:

A.M. BestMoody’sS&PFitch
A++ (Superior)Aaa (Exceptional)AAA (Extremely Strong)AAA (Exceptionally Strong)
A+ (Superior)Aa1, Aa2, Aa3 (High Quality)AA+, AA, AA- (Very Strong)AA+, AA, AA- (Very Strong)
A (Excellent)A1, A2, A3 (Upper Medium Grade)A+, A, A- (Strong)A+, A, A- (Strong)
A- (Excellent)Baa1, Baa2, Baa3 (Lower Medium Grade)BBB+, BBB, BBB- (Adequate)BBB+, BBB, BBB- (Good)
B++ (Good)Ba1, Ba2, Ba3 (Non-Investment Grade Speculative)BB+, BB, BB- (Less Vulnerable)BB+, BB, BB- (Speculative)
B+ (Good)B1, B2, B3 (Highly Speculative)B+, B, B- (More Vulnerable)B+, B, B- (Highly Speculative)
B (Fair)Caa1, Caa2, Caa3 (Substantial Risks)CCC+, CCC, CCC- (Currently Vulnerable)CCC+, CCC, CCC- (Substantial Credit Risk)
B- (Fair)Ca (Extremely Speculative)CC (Highly Vulnerable)CC (Very High Credit Risk)
C++ (Marginal)C (Lowest Rated)C (Imminent Default)C (Near Default)
C+ (Marginal)D (Default)RD (Restricted Default)
C (Weak)SD (Selective Default)D (Default)
C- (Weak)R (Regulatory Action)
D (Poor)
E (Under Regulatory Supervision)
F (In Liquidation)
S (Suspended)

Interpreting Ratings

To help you understand the financial strength of annuity companies, we will delve deeper into the rating scales and methodologies used by the major rating agencies: A.M. Best, Moody’s, Standard & Poor’s (S&P), and Fitch.

A.M. Best

A.M. Best’s rating scale ranges from A++ (Superior) to F (In Liquidation). The agency also provides additional designations such as “u” (Under Review) and “nr” (Not Rated). The ratings can be broadly classified into three categories:

  • Secure Ratings (A++ to B+): These companies exhibit strong financial strength and a superior ability to meet their ongoing insurance obligations.
  • Vulnerable Ratings (B to C): These companies have weak financial strength and a limited ability to meet their ongoing insurance obligations.
  • In Liquidation (D to F): These companies are in the process of liquidation or have been placed under regulatory supervision.

It’s important to note that A.M. Best also assigns an outlook to each rating (Positive, Negative, or Stable), which indicates the potential direction of the rating in the medium term.

Moody’s

Moody’s rating scale ranges from Aaa (Exceptional) to C (Lowest Rated). The ratings can be grouped into three main categories:

  • Investment Grade (Aaa to Baa): These companies have strong financial strength and are considered low risk.
  • Non-Investment Grade (Ba to Caa): These companies have weaker financial strength and are considered to be speculative or high-risk investments.
  • Highly Speculative (Ca to C): These companies have extremely weak financial strength and are considered highly speculative or near default.

Moody’s also uses numerical modifiers (1, 2, and 3) to indicate the relative position of a company within a rating category. Like A.M. Best, Moody’s assigns an outlook (Positive, Negative, or Stable) to its ratings.

Standard & Poor’s (S&P)

S&P’s rating scale ranges from AAA (Extremely Strong) to R (Regulatory Action). The ratings can be classified into four categories:

  • Investment Grade (AAA to BBB): These companies have strong financial strength and are considered low risk.
  • Non-Investment Grade (BB to B): These companies have weaker financial strength and are considered speculative investments.
  • Highly Speculative (CCC to C): These companies have very weak financial strength and are considered highly speculative or near default.
  • Regulatory Action (D and R): These companies are either in default or are facing regulatory action.

S&P also uses “+” and “-” symbols to show relative standing within a rating category. Like other agencies, S&P assigns an outlook (Positive, Negative, or Stable) to its ratings.

Fitch

Fitch’s rating scale ranges from AAA (Exceptionally Strong) to DDD (Default). The ratings can be broadly classified into four categories:

  • Investment Grade (AAA to BBB): These companies have strong financial strength and are considered low risk.
  • Non-Investment Grade (BB to B): These companies have weaker financial strength and are considered speculative investments.
  • Highly Speculative (CCC to CC): These companies have very weak financial strength and are considered highly speculative or near default.
  • Default (C to DDD): These companies are in default or have defaulted on their financial obligations.

Fitch uses “+” and “-” symbols to denote relative standing within a rating category and assigns an outlook (Positive, Negative, or Stable) to its ratings.

When comparing ratings across different agencies, it’s crucial to remember that each agency has its rating scale and methodology. A high rating from one agency doesn’t necessarily mean the company will have a high rating from another. Therefore, it’s advisable to compare ratings across multiple agencies to get a comprehensive understanding of a company’s financial stability.

Comparing and Interpreting Ratings

To help you better compare and interpret ratings across the four major rating agencies, consider the following steps:

  1. Understand the rating scales: Familiarize yourself with the rating scales used by each agency and their respective categories (investment grade, non-investment grade, etc.). This will enable you to quickly assess a company’s financial strength based on its rating.
  1. Look for consistency across agencies: While each agency may use different methodologies, a strong company should generally have high ratings across all agencies. Consistent high ratings are a good indicator of financial strength and stability.
  1. Consider rating outlooks: The outlook assigned by the rating agencies (Positive, Negative, or Stable) can provide insight into the potential direction of a company’s rating in the medium term. A positive outlook suggests that the rating may be upgraded, while a negative outlook indicates a potential downgrade.
  1. Monitor rating changes: Regularly review and monitor changes in the ratings of the annuity companies you’re interested in. Rating downgrades can be a warning sign of potential issues, while upgrades may signal improving financial health.
  1. Utilize rating agency reports: Rating agencies typically provide detailed reports explaining the rationale behind their ratings. These reports can offer valuable insights into a company’s financial health, risk factors, and future prospects.

How to Select an Ideal Annuity Company

With a deeper understanding of ratings and how to interpret them, you can make more informed decisions when selecting an annuity company. Consider the following factors in addition to ratings:

  1. Product Offerings: Evaluate the variety of annuity products a company offers, such as fixed, variable, and indexed annuities. Choose a company that provides the type of annuity that aligns with your financial goals and risk tolerance. It is recommended to seek advice from a professional financial advisor if you do not completely understand the in and out of annuities. At AdvisorWorld.com, we regularly post detailed reviews of various fixed-indexed annuities. Also, you can let us know if you want a particular annuity reviewed in the comments.
  1. Fees and Expenses: Understand and compare the fees and expenses associated with different annuity products, such as surrender charges, annual fees, and management fees. Opt for a company with competitive fee structures that don’t erode your returns.
  1. Customer Service: Assess the company’s reputation for customer service, claims processing, and support. Look for companies that are responsive, helpful, and easy to work with, as this will be crucial in the long run.
  1. Track Record: Review the company’s historical performance and track record in terms of investment returns, claims processing, and customer satisfaction. A company with a strong track record is more likely to deliver a positive experience for its policyholders.

Conclusion

Selecting the right annuity company is a crucial decision that can significantly impact your financial future. By evaluating the financial strength, product offerings, fees, customer service, and track record of various annuity companies, you can make a well-informed decision that aligns with your financial goals and needs. At AdvisorWorld, we always strive to provide you with detailed, unbiased information about various annuity products and their reviews. In addition, you should consult with a professional financial advisor to ensure that the annuity product you choose is appropriate for your unique financial situation. 

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Nikhil is an experienced finance professional with five years of experience in public and private equity research. He is the founder of the global financial research and analytics firm, Alliance Knowledge Partners. Throughout his career, he has consulted a large number of boutique and institutional investors to achieve their investment goals. He is a graduate in commerce and holds the CFA designation. Nikhil is a professional Chess player and likes to write on finance and business.

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