Once you’ve decided that a particular type
of annuity
fits into your retirement plans, it’s a good
idea to compare similar offerings from several companies
and to research the companies themselves.
The reason it’s important to evaluate annuity
providers — especially if you’re considering a fixed
annuity, a fixed account within a variable annuity, annuitization,
or an immediate annuity — is that you’re dependent
on the company to uphold to its part of the contract. If it has
financial problems, your long-term security could be at risk.
You can turn to professional rating services for
this information. The best known are A.M. Best Company, Moody’s
Investors Service, Standard & Poor’s, Fitch, Inc., and
Weiss Research. They evaluate providers and publish their findings
regularly, both in print and online.
The ratings, expressed as letter grades, range from AAA (also expressed
as A++ or Aaa) at the top to F at the bottom — though some firms rate
the least viable companies with Cs and Ds.
The factors the
rating
companies
consider include claims — paying ability,
financial reserves, financial history, and the soundness
of the company’s investments. Much of the analysis
is quantitative, but ratings may also include qualitative
assessments of management style, investment style,
and other factors.
