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FAQ for Claim Professionals
  1. Introduction
  2. What is a Structured Settlement?
  3. Why would a claimant want one?
  4. Why wouldn't they want one?
  5. How can the claimant manage the disadvantages?
  6. Why does my company want me to use them?
  7. Which kinds of cases are good candidates for structures?
  8. Which cases are not?
  9. What about case size?
  10. How do I get started?
  11. What's a typical negotiating scenario?
  12. What if the Claimant says no?
  13. Approved annuity issuers
  14. Why annuities?
  15. Annuity Pricing
  16. Reduced life expectancy discounts
  17. What is an "assignment"?
  18. Structure of the deal
  19. Insurance company ratings
  20. The closing process
  21. What do settlement brokers do?
  22. How are brokers paid?
  23. What if the claimant has their own broker?
Home Page > "How to" For Claims Professionals >ABC's

Insurance Company Ratings

Since the vast majority of structured settlements are funded with annuity contracts, much attention is paid to the quality of the annuity issuers.

Life insurance companies are highly complex financial entities. Assessing their creditworthines is no job for amateurs. For this reason, the parties rely on private rating agencies to do it for them. Rating agencies audit and review the companies and issue formal opinions on their creditworthiness. For simplicity, they use grading systems such as: A, B, C, etc.

The standard in structured settlements for many years was to accept no less than an A+ rating from the AM Best Company. Similar ratings are available from Standard & Poor's (S&P), Moody's, Duff & Phelps, and others. While they all use slightly different grading systems, claimants generally accept no less than "investment grade" quality funding assets.

[How meaningful is the "+" in a rating? It's hard to quantify and the issue is open to debate. Rating agencies have been known to change their rating designation notations without any credit quality change whatsoever in the underlying companies being graded. The very highest AM Best ratings is now "A++" but not many companies hold that rating. Using this rating as strict criteria would likely exclude numerous high quality companies with more competitive prices. Similarly, one probably shouldn't exclude an "A" rated company out of hand, if it appears otherwise advantageous to use them. This is a value decision.]