One of the top credit rating entities among the major four is Fitch. They are responsible for tackling the overview of an entire company to evaluate its current solvency, its overall financial strength, and even how likely it is the company will remain in its current standing in the near future.
About Fitch Ratings Inc.
At some point in their life, a person is responsible for buying insurance to protect their home, car or even their families from an untimely death. But picking the right company in today’s modern world is more than just the lowest possible price, a funny television commercial, or a fancy sky rise building in a major city.
Because insurance can often be a bit of an intangible purchase and one which may not need to produce any return for several years or decades to come, having an agency like Fitch sort through the financial aspects of an insurer can help you weed out the companies who are least likely to keep providing their necessary value in the years to come.
Fitch does this by compiling data, as they have since 1913, in a meaningful way to showcase how strong and solvent an insurance company truly is. They display their review in an alphabetical and symbol related graph, to make is simple for all consumers to get a snapshot picture of what a company really represents behind its brand. It looks like this:
|AAA (Exceptionally Strong)||BB+, BB, BB- (Moderately Weak)|
|AA+, AA, AA- (Very Strong)||B+, B, B- (Weak)|
|A+, A, A- (Strong)||CCC+, CCC, CCC- (Very Weak)|
|BBB+, BBB, BBB- (Good)||CC, C (Poor)|
If you’re familiar with the other three private credit agencies, A.M. Best, Moody’s and Standard & Poor’s, you can see that Fitch’s rating guideline is slightly different and unique in its own way. Where a “B+” with one rating group might be “Good”, it’s one of the lower rankings according the proprietary scale Fitch uses.
Fitch Ratings monitor a large scale of factors, both quantitative and qualitative in nature. It aims to give consumers and industry wide participants a more easily legible benchmark to use in order to compare one company to the next. Although it’s not to be used purely on its own, it does supply a thoroughly evaluated, yet simple grade to understand where a company currently lies.
Reports are given based on the supplied information on such financial documents like cash flow statements, balance sheets, operating cost analyses, and more. Aside from claims paying abilities reflected financially, current businesses models and the management team behind the company’s operations could also be taken into consideration before a final rating is awarded.
Fitch also publishes industry wide reports, called sector coverages, where it attempts to also get a snapshot of what an entire industry looks like in connection with the current economic struggles, adherence to new regulation, and the overall competitive market within the industry.
The Fitch Group is made up of four different arms, the Fitch Ratings, Fitch Solutions, Fitch Learning and the Business Monitor International (BMI). Aside from its presence in the United States, is also resides and operates in 30 other countries worldwide. Not limited to just insurance, Fitch also rates for corporate finance, global infrastructure, public and structured finance, and more.
While ratings are independent and data driven in nature, one should also take into account other ratings from the other major rating agencies, company histories, current events and even current client reviews in order to make the best, most informed decision in choosing an insurance company to do business with.