When you shop for a fixed annuity, every product listing shows an AM Best rating next to the carrier name. It might say A+, or B++, or A-. Most people gloss over it. They should not.
What Is AM Best?
AM Best is an independent credit rating agency that specializes exclusively in the insurance industry. They have been rating insurance companies since 1899. Their ratings reflect their opinion of an insurer's financial strength — specifically, their ability to pay claims and meet their contractual obligations.
For annuity buyers, that means their ability to pay you your money back — with interest — when your contract matures.
The Rating Scale
AM Best ratings run from A++ (Superior) down through the alphabet. Here is what you will see most often in the fixed annuity market:
A++ and A+ (Superior) — The highest ratings. These carriers have exceptional financial strength. Examples: MassMutual (A++), Protective Life (A+), Midland National (A+).
A and A- (Excellent) — Still very strong. The vast majority of reputable fixed annuity carriers fall in this range. Oxford Life, Oceanview, Global Atlantic, and many others sit here.
B++ and B+ (Good) — Solid carriers, but a step down in financial strength. Equitrust, Revol One, and NexAnnuity carry these ratings. They are not red flags — they just reflect a smaller or less-diversified balance sheet.
B and below — Worth scrutinizing carefully. Carriers at B and lower are not necessarily in trouble, but they warrant more research. Sentinel Security Life, for example, carries a B rating but is backed by A-CAP Group, a substantial parent company.
Does a Lower Rating Mean the Carrier Is Risky?
Not automatically. Rating is one factor among several. A B++ carrier with a strong parent company and 30 years of clean operations may be more reliable in practice than a recently-upgraded A- carrier with concentrated investment exposure.
That said, ratings exist for a reason. If two products offer similar rates, the one from the higher-rated carrier is the more conservative choice.
What Protects You Beyond the Carrier's Rating?
Every state has a Life and Health Insurance Guaranty Association that provides a backstop if an insurer becomes insolvent. In New Jersey, the NJLHIGA covers up to $500,000 per person for annuity values.
This is not FDIC insurance — it is a different mechanism — but it does provide a meaningful layer of protection beyond the carrier's own balance sheet.
How to Use Ratings When Shopping
A reasonable approach for most buyers:
- For your primary or largest annuity holding, stick to A- or better
- For a portion of a larger portfolio, B++ carriers are acceptable if the rate differential is significant
- Always check if the carrier has a strong parent company when the standalone rating is lower
- Ask your advisor to explain any carrier rated below B+
The goal is not to get the absolute highest rating at any cost — it is to find the best combination of rate and financial strength for your specific situation.
If you want to compare carriers and ratings side by side for the rates currently available in New Jersey, use our rate tool or reach out directly.
Have questions about this topic?
Devin Shave is an independent annuity advisor based in Brielle, NJ. Free consultations, no obligation, no pressure.
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