Underwriting Insurance Company Rating
Similar to other financial companies who issue debt, insurance companies are also subject to certain ratings from rating companies. Some of these companies are A.M. Best, Standard and Poor's, and Moody's. The ratings of individual insurance companies of pet insurance are important but a greater concern should be focused on the terms of which a property and casualty company can cancel their relationship with the provider of insurance.
For example if PurinaCare whose, underwriter is American International Group (AIG), were to lose their contract with the underwriter if the underwriter felt that they weren't making enough return, and were unable to find a new underwriter, all policyholders would be absolved.
Below is an example of how AM Best rates companies*.
*A.M. Best. (June 22, 2011). Guide To Best's Financial Strength Ratings. In undefined. Retrieved November 5, 2011, from http://www.ambest.com/ratings/guide.pdf.
Financial Strength Ratings
Secure
A++ and A+ (Superior)
Assigned to companies that have, in our opinion, a superior ability to meet their ongoing obligations to policyholders.
A and A- (Excellent)
Assigned to companies that have, in our opinion, an excellent ability to meet their ongoing obligations to policyholders.
B++ and B+ (Good)
Assigned to companies that have, in our opinion, a good ability to met their ongoing obligations to policyholders.
Vulnerable
B and B- (Fair)
Assigned to companies that have, in our opinion, a fair ability to meet their ongoing obligations to policyholders, but are financially vulnerable to adverse changes in underwriting and economic conditions.
C++ and C+ (Marginal)
Assigned to companies that have, in our opinion, a marginal ability to meet their ongoing obligations to policyholders, but are financially vulnerable to adverse changes in underwriting and economic conditions.
C and C- (Weak)
Assigned to companies that have, in our opinion, a weak ability to meet their ongoing obligations to policyholders, but are financially very vulnerable to adverse changes in underwriting and economic conditions.
D (Poor)
Assigned to companies that, in our opinion, may not have an ability to meet their ongoing obligations to policyholders and are financially extremely vulnerable to adverse changes in underwriting and economic conditions.
E (Under Regulatory Supervision)
Assigned to companies (and possibly their subsidiaries/affiliates) that have been placed by an insurance regulatory authority under a significant form of supervision, control or restraint, whereby there are no longer allowed to conduct normal ongoing insurance operations. This would include conservatorship or rehabilitation, but does not include liquidation. It may also be assigned to companies issued cease and desist orders by regulators outside their home state or country.
F (In Liquidation)
Assigned to companies that have been placed under and order of liquidation by a court of law or whose owners have voluntarily agreed to liquidate the company. Note: Companies that voluntarily liquidate or dissolve their charters are generally not insolvent.
S (Rating Suspended)
Assigned to rated companies that have experienced sudden and significant events affecting their balances sheet strength or operating performance whereby the rating implications cannot be evaluated due to a lack of timely or adequate information.
