Fitch Insurance Company Ratings Explained

Fitch insurance company ratings are explained in our guide below. Fitch rates different providers based on their risk of default and is an excellent resource to check before buying insurance coverage. Fitch insurance company ratings are based on a letter grade from D to AAA. When shopping for insurance, it’s recommended to look for companies with Fitch ratings of BBB or higher.

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UPDATED: Jul 16, 2021

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Written By: Chris TepedinoReviewed By: Laura WalkerUPDATED: Jul 16, 2021Fact Checked

Fitch’s insurance company ratings are performed by a staff of trained analysts who review each company on several factors including the ability to meet commitments such as interest and dividend payments, the company’s ability to withstand a major surge in claims, and how well the company has performed economically.

Ratings are performed regularly and may be adjusted any time there is any major financial activity with the company.

Fitch Letter Gradations

AAA Highest credit quality Denotes the lowest expectation of default risk.
AA Highest credit quality Denote expectations of very low default risk.
A Highest credit quality Denote expectations of low default risk
BBB Highest credit quality Indicate that expectations of default risk are currently low
BB Speculative Indicate an elevated vulnerability to default risk,
B Speculative Indicate that material default risk is present, but a limited margin of safety remains
CCC Substantial credit risk Indicates default is a real possibility.
CC Substantial credit risk Indicates default is a real possibility.
C Substantial credit risk Default is imminent or inevitable, or the issuer is in standstill.
RD Substantial credit risk Denotes that Fitch’s opinion of the company is that they have experienced an uncured payment default on a bond, loan or other material financial obligation but has not yet entered bankruptcy.
D Default Indicates that Fitch’s opinion is that the company has entered into bankruptcy or has ceased business operations.

Investment Grades

These grades are the letters grades of AAA, AA, A, and BBB. They represent the highest and most dependable scores available, and reflect a business that is on a sound financial foundation. For the laymen, “investment grade” simply indicates a company with a low to moderate credit risk.

Speculative Grades

Speculative grades are the letter grades of BB, CCC, CC, and D. As the grades move down progressively from BB, the financial security of the company is more and more troubled or the creditworthiness of the company is in serious financial doubt. Speculative grades are not the best choice for purchasing long term insurance or other financial contracts.

Not Rated

Companies that have an NR have not been rated. These companies may be subsidiaries of larger companies which have been rated or may themselves own smaller, already rated institutions. In some cases, parts of the company have been rated but full access to the necessary information prevented making a complete rating. While there is nothing to say that a Non-rated company is a bad investment, the best advice is to stick with higher rated insurers.

Fitch Grades Risk

Where some ratings companies issue grades based on many different financial factors, Fitch’s uses the financial information available to grade the risk associated with issuing credit to the company. Rather than being a definitive guide to which companies are safe to work with, Fitch’s provides a rating based on the perceived risks of such investments.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.

Chris Tepedino is a feature writer that has written extensively about home, life, and car insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and C...

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Written by Chris Tepedino
Insurance Feature Writer Chris Tepedino

Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

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Reviewed by Laura Walker
Former Licensed Agent Laura Walker

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