JUPITER, Fla.- Unlike some of the nation’s largest banks, many large life and annuity insurers, including MassMutual, Northwestern Mutual, New York Life, Principal Life and TIAA, receive top grades from Weiss Ratings, the nation’s only provider of independent insurance company ratings.
However, Weiss Ratings, in a list released June 10, also found that many smaller insurers are vulnerable to financial difficulties based on Weiss Ratings’ analysis of each insurer’s risk-adjusted capital, five-year historical profitability, quality of investments, liquidity, asset and premium growth, plus other factors.
Among the 887 U.S. life and annuity insurers covered, 80 insurers, controlling $1.3 trillion, or 26.6% of the industry’s assets, are viewed as strong enough to be recommended to consumers, receiving a rating of B+ (good) or higher, while 74 companies controlling only $22.2 billion, or 0.5% of the industry’s total assets, are considered vulnerable, meriting a Weiss Financial Strength Rating of D+ (weak) or lower.
“The bulk of the assets in the life and annuity insurance industry are controlled by relatively strong and stable institutions, making it stronger overall than the banking industry,” said Martin D. Weiss, president of Weiss Ratings. “Although profitability in the industry fell during the debt crisis and then recovered last year, the strongest insurers remained financially healthy throughout the market turmoil. But that does not preclude future failures among the weakest, especially if the economy experiences another downturn.”
Life and annuity insurers reported a dramatic turnaround in profits in 2009, earning $21.1 billion compared to a $51.8 billion loss in 2008. This improvement was primarily due to a $45 billion decrease in the amount of additional reserves that were set aside as well as a decrease in net realized losses on investments, which dropped from $50.5 billion in 2008 to $28.7 billion in 2009.
Below are the nation’s life and annuity insurers with $10 billion or more in assets receiving a Weiss Rating of B+ or higher:
–Teachers Insurance & Annuity Association of America, New York
–Northwestern Mutual Life Insurance Company, Milwaukee
–Massachusetts Mutual Life Insurance Company, Springfield, Mass.
–Principal Life Insurance Company, Des Moines, Iowa
–New York Life Insurance Company, New York
–Pacific Life Insurance Company, Newport Beach, Calif.
–New York Life Insurance & Annuity Corp., a unit of New York Life
–Allstate Life Insurance Company, Northbrook, Ill.
–State Farm Life Insurance Company, Bloomington, Ill.
–Guardian Life Insurance Company of America, New York
–Midland National Life Insurance Company, Sioux Falls, S.D.
To help consumers avoid the weakest insurers and find the strongest in their state, Weiss Ratings has released its list of 74 weakest and 80 strongest life and annuity insurers to the public. Consumers can immediately receive the lists at no charge by providing their e-mail address at www.weissratings.com/lifeandannuitylists.
“The importance of selecting a strong insurer is paramount,” warned Weiss. “The purchase of an insurance policy or annuity is a long-term decision so consumers need to choose an insurer with the financial strength to withstand adverse economic conditions over the long haul.”
Weiss Ratings accepts no payments for its ratings from rated institutions. It is among the nation’s leading providers of independent ratings on 8,000 U.S. banks and S&Ls and the only provider of independent ratings on the nation’s 4,200 insurance companies. Weiss Ratings also distributes independent ratings on the shares of thousands of publicly traded companies, mutual funds, closed-end funds and ETFs.
Weiss identified, in advance, nearly all major banks that failed or required a federal bailout in the 2008-2009 debt crisis. (See Weiss Warnings of Financial Failures in Debt Crisis of 2008-2009.)
Separately, Weiss outperformed Standard and Poor’s, Moody’s, A.M. Best and Duff & Phelps (now Fitch) in warning of future life and health insurance company failures according to a landmark study by the U.S. Government Accountability Office (GAO), while also outperforming its competitors in identifying the strongest insurers, according to its follow-up study using the GAO’s research methodology. According to a leading consumer publication’s May 2009 study of life insurance ratings by Fitch, Moody’s, S&P, A.M Best and Weiss Ratings, Weiss Ratings (formerly TheStreet.com Ratings) “was the toughest grader with independent and objective ratings.”
Thanks to its strong track record and independence, The New York Times wrote that Weiss was “the first to see the dangers and say so unambiguously;” Barron’s wrote that Weiss is “the leader in identifying vulnerable companies;” and Esquire concluded that Weiss Ratings is “the one company [that… provides financial grades free of any conflicts of interest.”