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Standard & Poor's credit rating
There are a number of ways of determining the financial strength
of providers. The simplest is the rates these providers are
given by independent credit rating agencies such as Standard
& Poor's. This is a measure of the capacity to meet policyholder
obligations under a variety of economic and underwriting conditions.
The ratings are as follows:
Standard
& Poor's credit rating
AAA
Superior
Superior financial security on an
absolute and relative basis. Capacity to meet policyholder
obligations is overwhelming under a variety of economic
and underwriting conditions.
AA
Excellent
Excellent financial security. Capacity
to meet policyholder obligations is strong under
a variety of economic and underwriting conditions.
A
Good
Good financial security but capacity
to meet policyholder obligations is somewhat susceptible
to adverse economic and underwriting conditions.
BBB
Adequate
Adequate financial security but capacity
to meet policyholder obligations is susceptible
to adverse economic and underwriting conditions.
BB
May
be
adequate
Financial security may be adequate,
but capacity to meet policyholder obligations, particularly
with respect to long term or "long trail"
policies, is vulnerable to adverse economic and
underwriting conditions.
B
Vulnerable
Vulnerable financial security. Currently
able to meet policyholder obligations but capacity
to meet policyholder obligations is particularly
vulnerable to adverse economic and underwriting
conditions.
CCC
Extremely
vulnerable
Extremely vulnerable financial security.
Continued capacity to meet policyholder obligations
is highly questionable unless favourable economic
and underwriting conditions prevail.
NR
Not
Rated
Financial security not rated. Standard
& Poor's has not been requested to rate the
capacity to meet policyholder obligations.
Moody's credit rating
Another major independent credit rating agency is Moody that
provide a similar rating as Standard & Poor's. Again this
is a measure of the capacity to meet policyholder obligations
under a variety of economic and underwriting conditions. The
ratings are as follows:
Moody's
credit rating
Aaa
Exceptional
Insurance companies rated Aaa offer
exceptional financial security. While the financial
strength of these companies is likely to change,
such changes as can be visualised are most unlikely
to impair their fundamentally strong position.
Aa
Excellent
Insurance companies rated Aa offer
excellent financial security. Together with the
Aaa group, they constitute what are generally known
as as high-grade companies and rated lower than
Aaa companies because long-term risks appear somewhat
larger.
A
Good
Insurance companies rated A offer
good financial security. However, elements may be
present which suggest a susceptibility to impairment
sometime in the future.
Baa
Adequate
Insurance companies rated Baa offer
adequate financial security. However, certain protective
elements may be lacking or may be characteristically
unreliable over any length of time.
Ba
Questionable
Insurance companies rated Ba offer
questionable financial security. Often the ability
of these companies to meet policyholder obligations
may be very moderate and thereby not well safeguarded
in the future.
B
Poor
Insurance companies rated B offer
poor financial security. Assistance of punctual
payment of policyholder obligations may be very
moderate and thereby not well safeguarded in the
future.
Caa
Very
Poor
Insurance companies rated Caa offer
very poor financial security. They may be in default
on their policyholder obligations or there may be
present elements of danger with respect to punctual
payment of policyholder obligations and claims.
Ca
Extremely
Poor
Insurance companies rated Ca offer
extremely poor financial security. Such companies
are often in default on their policyholder obligations
or have other marked shortcomings.
C
Lowest
Insurance companies rated C are the
lowest rated class of insurance company and are
regarded as having extremely poor prospects of ever
offering financial strength.
With Profit strength
In addition information is available regarding the providers
total assets under management (TA), free assets (FA) and free
asset ratio as follows:
With
Profit financial strength
life company
S & P
TA (£bn)
FAR
FA (£m)
AXA
AA
£555
9.5%
£1,081
Britannic
BBB
£15
6.4%
£440
Clerical Medical
AA
£62
9.5%
£2,039
Eagle Star
A-
£16
4.5%
£526
Friends Provident
AA-
£66
7.7%
£1,775
Legal & General
AAA
£120
7.1%
£2,757
Liverpool &
Victoria
BBB
£6.5
13.6%
£541
MGM Assurance
NR
£1.3
3.3%
£45
Norwich Union
AA
£200
8.9%
£2,866
NPI
A+
£100
4.6%
£758
Royal London
NR
£21
5.6%
£1,185
R & S Alliance
NR
N/A
6.1%
£681
Prudential
AA+
£163
7.3%
£5,672
Scottish Equitable
AA+
£185
6.9%
£803
Scottish Mutual
A-
£15
3.3%
£503
Scottish Provident
NR
£10
5.8%
£536
Scottish Widows
AA
£76
6.6%
£1,521
Standard Life
AA
£80
5.0%
£3,356
Winterthur Life
A
£528
2.4%
£144
Abbreviations - S & P: Standard
& Poor's rating; FAR: free asset ratio;
TA: total assets under management in £ billions;
FA: free assets (assets over liabilities of the
With Profit fund) in £ millions free
annuity quote.
The total assets under management relate to policyholders investments.
The free assets relate to the assets of the life company and
the free asset ratio shows the percentage of the assets of the
company over the liabilities.
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