Standard & Poors

Written by  //  June 24, 2011  //  Insurance Glossary: N-S, Insurance Terms  //  Comments Off on Standard & Poors

This New York-based rating service bases its judgment of insurers on their claims paying ability. The more reliable a carrier is expected to be in covering its policy liabilities, the higher their rating. Weighing such factors as industry-specific risk, management performance, operating efficiency and capitalization, S&P grants companies a letter grade. The grade scale includes AAA (superior financial security; the highest), AA (excellent; highly safe), A (good; more vulnerable to economic change than highly rated companies), BBB (adequate; more exposed to economic change than highly rated companies), BB (adequate, but capacity to meet long-term policies is vulnerable), B (vulnerable), CCC (highly vulnerable), to R (for being subject to regulatory action; the lowest).

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