Credit Ratings

Insurer Financial Strength Rating

Definition of Insurer Financial Strength Rating

Local credit rating standard (NICE, KIS, KR)

Local credit rating standard (NICE, KIS, KR) List
Rating Definition
AAA An insurer rated ‘AAA’ has extremely strong capacity to meet policyholder and contract obligations.
AA An insurer rated ‘AA’ has very strong capacity to meet policyholder and contract obligations.
The impact of any adverse business and economic factors is expected to be very small.
A An insurer rated ‘A’ has strong capacity to meet policyholder and contract obligations, but is somewhat likely to be affected by adverse business conditions.
BBB An insurer rated ‘BBB’ has good capacity to meet policyholder and contract obligations, but is more likely to be affected by adverse business conditions than are higher rated insurers.
BB An insurer rated ‘BB’ has marginal capacity to meet policyholder and contract obligations.
Though positive factors exist, there are speculative elements with respect to the stability of its capacity to meet financial obligations in the future.
B An insurer rated ‘B’ has weak capacity to meet policyholder and contract obligations.
Adverse business conditions will likely impair its ability to meet financial obligations.
CCC An insurer rated ‘CCC’ has very weak capacity to meet policyholder and contract obligations.
There may be present elements of danger with respect to timely payment of financial obligations.
CC An insurer rated ‘CC’ has extremely weak capacity to meet policyholder and contract obligations, and is likely not to meet some of its financial obligations.
C An insurer rated ‘C’ is highly likely not to meet its policyholder and contract obligations.
D An insurer rated ‘D’ has failed to make payments on their obligations in a timely manner.
It is either under a direct control of regulator or its normal operation is limited.
Depending on the decision of regulator, the repayment priority or whether the repayment is to be made can change.
  • The ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) to show relative standing within the major rating categories.

Insurer Financial Strength Rating

Credit Rating Classification and Definition

Fitch Ratings

Fitch Ratings List
Rating Definition
AAA 'AAA' IFS Ratings denote the lowest expectation of ceased or interrupted payments.
They are assigned only in the case of exceptionally strong capacity to meet policyholder and contract bligations.This capacity is highly unlikely to be adversely affected by foreseeable events.
AA 'AA' IFS Ratings denote a very low expectation of ceased or interrupted payments.
They indicate very strong capacity to meet policyholder and contract obligations.
This capacity is not significantly vulnerable to foreseeable events.
A 'A' IFS Ratings denote a low expectation of ceased or interrupted payments.
They indicate strong capacity to meet policyholder and contract obligations.
This capacity may, nonetheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings.
BBB 'BBB' IFS Ratings indicate that there is currently a low expectation of ceased or interrupted payments. The capacity to meet policyholder and contract obligations on a timely basis is considered adequate, but adverse changes in circumstances and economic conditions are more likely to impact this capacity.
BB 'BB' IFS Ratings indicate that there is an elevated vulnerability to ceased or interrupted payments, particularly as the result of adverse economic or market changes over time.
However, business or financial alternatives may be available to allow for policyholder and contract obligations to be met in a timely manner.
B 'B' IFS Ratings indicate two possible conditions.
If obligations are still being met on a timely basis, there is significant risk that ceased or interrupted payments could occur in the future, but a limited margin of safety remains. Capacity for continued timely payments is contingent upon a sustained, favorable business and economic environment, and favorable market conditions. Alternatively, a 'B' IFS Rating is assigned to obligations that have experienced ceased or interrupted payments, but with the potential for extremely high recoveries. Such obligations would possess a recovery assessment of 'RR1' (Outstanding).
CCC 'CCC' IFS Ratings indicate two possible conditions.
If obligations are still being met on a timely basis, there is a real possibility that ceased or interrupted payments could occur in the future. Capacity for continued timely payments is solely reliant upon a sustained, favorable business and economic environment, and favorable market conditions. Alternatively, a 'CCC' IFS Rating is assigned to obligations that have experienced ceased or interrupted payments, and with the potential for average to superior recoveries. Such obligations would possess a recovery assessment of 'RR2' (Superior), 'RR3' (Good), and 'RR4' (Average).
CC 'CC' IFS Ratings indicate two possible conditions.
If obligations are still being met on a timely basis, it is probable that ceased or interrupted payments will occur in the future. Alternatively, a 'CC' IFS Rating is assigned to obligations that have experienced ceased or interrupted payments, with the potential for average to below-average recoveries. Such obligations would possess a recovery assessment of 'RR4' (Average)s or 'RR5' (Below Average).
C 'C' IFS Ratings indicate two possible conditions.
If obligations are still being met on a timely basis, ceased or interrupted payments are imminent. Alternatively, a 'C' IFS Rating is assigned to obligations that have experienced ceased or interrupted payments, and with the potential for below average to poor recoveries. Such obligations would possess a recovery assessment of 'RR5' (Below Average) or 'RR6' (Poor).
  • 'C' IFS Ratings indicate two possible conditions.
    If obligations are still being met on a timely basis, ceased or interrupted payments are imminent. Alternatively, a 'C' IFS Rating is assigned to obligations that have experienced ceased or interrupted payments, and with the potential for below average to poor recoveries.
    Such obligations would possess a recovery assessment of 'RR5' (Below Average) or 'RR6' (Poor).

Moody’s Investors Service

Moody’s Investors Service List
Rating Definition
Aaa Insurance companies rated Aaa offer exceptional financial security.
While the credit pro-file of these companies is likely to change, such changes as can be visualized are most unlikely to impair their fundamentally strong position.
Aa Insurance companies rated Aa offer excellent financial security.
Together with the Aaa group, they constitute what are generally known as high-grade companies. They are rated lower than Aaa companies because long-term risks appear somewhat larger.
A Insurance companies rated A offer good financial security.
However, elements may be present which suggest a susceptibility to impairment sometime in the future.
Baa Insurance companies rated Baa offer adequate financial security.
However, certain protective elements may be lacking or may be characteristically unreliable over any great length of time.
Ba Insurance companies rated Ba offer questionable financial security.
Often the ability of these companies to meet policyholder obligations may be very moderate and thereby not well safeguarded in the future.
B Insurance companies rated B offer poor financial security.
Assurance of punctual payment of policyholder obligations over any long period of time is small.
Caa Insurance companies rated Caa offer very poor financial security.
They may be in default on their policyholder obligations or there may be present elements of danger with respect to punctual payment of policyholder obligations and claims.
Ca Insurance companies rated Ca offer extremely poor financial security.
Such companies are often in default on their policyholder obligations or have other marked shortcomings.
C Insurance companies rated C are the lowest-rated class of insurance company and can be regarded as having extremely poor prospects of ever offering financial security.
  • Moody's (of which headquarters is located in the U.S.) numbers each grades from Aa thru Caa with 1, 2, and 3.
  • The numbers are used to break down the grades further within the same grade.
  • 1 is the highest and 3 is the lowest. However, the insurers' financial soundness within the grade symbols (such as 'Aa') are mostly the same.

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