Moody’s Insurance Company Ratings Explained

Moody insurance ratings determine how financially stable a provider is; the higher the score, the more secure the company. Moody’s insurance company ratings are an excellent resource when shopping for insurance coverage.

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UPDATED: Jun 28, 2022

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Written By: Chris TepedinoReviewed By: Laura WalkerUPDATED: Jun 28, 2022Fact Checked

Before purchasing insurance, it is a good idea to check the ratings of the insurance company to find out how it fares. That is where Moody’s insurance company ratings and organizations like it come in, providing you with a simple scale to illustrate how well the company you are interested in is doing. Armed with Moody insurance ratings information, the consumer is able to compare companies, make better-informed decisions, and be prepared for what they are signing themselves up for.

Moody’s Letter Gradations

Aaa Superior Companies with this rating are graded as among the most stable financial institutions.
Aa Excellent This grade shows potential for long-term growth, with the potential for an even higher rating.
A Good This rating has room for improvement but is still considered a safe and stable investment.
Baa Fair This rating, while it is still stable, indicates that the company has undergone financial difficulties. Further research is advised before investing or purchasing long-term insurance contracts.
Ba Needs Improvement This rating is given to companies that indicate a strong financial foundation but have suffered monetary setbacks or losses recently. This is probably not a good company for long-term investments, but it is still far from a loss.
B Barely acceptable Companies with this rating are probably not good insurance or investment choices. Wait to find out whether the ratings go up or down in future ratings before investing.
Caa Poor Companies with a Caa rating are going through financial turmoil. Consumers would be best advised to avoid purchasing from these companies until the financial outlook has improved.
Ca Exceptionally poor A company rated as Ca is not a good choice for long or short-term insurance policies. Investors may want to keep an eye on the company to help make future investment decisions, but investing in a Ca rating should only be done if you have reason to believe that the company is about to make a turnaround.
C Failing A company with this rating is probably going through serious financial upheavals. While your policy may still be safe, it would require further research before purchasing, and then only if a market analysis indicates future growth is imminent.

Numeric Modifiers

Along with each letter grade, a number, 1, 2, or 3, may be appended to the rating. This number is used to “fine-tune” the letter score, providing sub-grades within the grading scale.

Lack of Moody Insurance Ratings

Lack of a Moody’s rating does not mean that the company is insolvent or a poor choice for an investment. What lack of rating indicates is that the company was either unwilling to participate in the rating system, or the necessary information was not available at rating time.

Far from being a bad score, having no score at all simply indicates that the company is either newly purchased or has undergone a restructuring that has not yet made it into the rating system. Additionally, some securities and other investment companies are exempt from the ratings, generally as a result of market or SEC activity.

Moody’s Insurance Company Ratings Change

Ratings can change often. While it is not unusual for a financial company to maintain the same rating for months or even years at a time, the rating is updated regularly. For the consumer, updates in the ratings may only be apparent for companies that are experiencing financial stress or surplus. In the first case, the rating would go down, and in the second, if the rating was not already at the top tier, the rating would go up.
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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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