Ask the Life Insurance Expert

I looked up one insurance company on Insure.com. The rating was "Api." What does that mean?

Good for you for checking out the financial strength of an insurance company. This is an important step in evaluating whether you want to do business with an insurer, especially if you're considering purchasing permanent or term life insurance.

The "Api" financial strength rating is assigned by Standard & Poor's and means two things:

  1. The “A” means the insurer has earned an A rating for financial strength, which is "strong." The A rating is the third strongest rating an insurer can earn.
  2. The “pi” means that the rating is based on published financial information and other information in the public domain. The rating does not reflect in-depth interviews with the insurer's managers, so pi ratings are based on less comprehensive information than ratings without the pi subscript. Pi ratings are reviewed each year based on new annual financial statements, and may even be reviewed more frequently if a major event could affect an insurance company's financial security.

The highest rating an insurance company can earn from Standards & Poor’s is “AAA,” which denotes "extremely strong" financial security characteristics, and “AA” is considered "very strong."

“BBB” is the next rating after A. It means a company has good financial security, but is more likely to be affected by adverse business conditions than insurers with higher ratings. The ratings follow from there with “BB,” “B,” “CCC” and “CC.” A rating of "R" means an insurer is under regulatory supervision because of its weak condition. "NR" means an insurer is not rated.

For more, see Standard & Poor's ratings definitions and the Insurance Company Ratings Lookup Tool.


Last updated: Jan. 25, 2011
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