How Do Investors Analyze An Insurance Company?

There are many investors in an insurance company. Investors provide much needed capital for insurance companies to operate efficiently and maintain reserves needed to pay claims and make investments. There are numerous factors and variables to consider when analyzing a particular insurance company. However, there are ways for savvy investors to get in depth analysis about a particular insurance company rather easily and quickly.

AM Best Company

AM Best is one of the best known insurance companies rating services in the world. AM Best rates and evaluates insurance companies as well as insurance linked capital market transactions such as: catastrophe bonds, catastrophe risks, continuing capital solutions as well as the insurance company itself and insurance company’s reserves, assets and ability to remain viable and solvent.

If you are considering investing in an insurance company or an insurance linked security, you should visit the AM Best Company website at to fully research insurance companies and their securities investments. Depending upon the type of research you want to perform AM Best assigns different types of ratings:

  • Financial Strength Rating - The financial strength rating of the insurance company is AM Best’s independent opinion of a particular insurance company’s financial strength and ability to meet its ongoing policy and contract obligations. This is AM Best rating assigned to almost every major insurance companies in the world and assigned to every insurance company doing business within the United States.
  • Issuer Credit Ratings are an independent opinion and will provide an analysis of an issuer/entity ability to meet obligations.
  • Debt Rating – The debt rating of an insurer is the opinion of AM Best regarding an issuer's ability to meet continuing financial obligations to security holders at the time they are due. AM Best assigns this rating to all insurance companies and insurance linked securities of insurance companies that are rated by AM Best.
  • In addition to the above ratings, AM Best also provides many valuable research tools for researching individual insurance company and their securities. AM Best offers in depth reporting and analysis on thousands of insurers, reinsures’ as well as related groups.

Other Insurance Company Research Options

While AM Best Company is definitely the biggest ratings company for insurance companies and insurance linked securities, there are other major companies that provide similar services as well. Major credit ratings companies like Standard & Poor's also offer a lot of in depth reporting and analysis on many American insurance companies and insurance backed securities.

Also, companies like Weiss Research, and Duff & Phelps also offer research and reports and company ratings for a wide array of insurance companies and insurance linked securities.

If you're considering investing in insurance company or an insurance linked security, you should use companies like the ones mentioned above to do as much research as possible before making an investment. The time and expense involved in researching an insurance company can often lead much better investment decisions and higher returns on investment in the future.

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