Our Rating Panel
Stephen Kates, CFP®
Founder of Clocktower Financial Consulting
FINRA Series 7 and Series 66 License Holder
Federal Retirement Advisor
How We Reviewed Providers
Annuity.org ultimately decided to base its methodology on four key factors: NAIC Complaint Index score, AM Best Financial Strength Rating, availability of products and amount of direct premiums sold. These four variables helped create a strong mix of measuring a company’s reach and stature while also heavily emphasizing their stability and customer experience.
We then assigned a different weight to each of these categories.
- NAIC Complaint Index: 35%
- AM Best Financial Strength Rating: 30%
- Annual Direct Premiums Sold: 20%
- Availability: 15%
The NAIC Complaint Index score – which measures the number of customer complaints a provider has against their share of the market – was rated the heaviest since it provides the best look at real customer experience.
Financial stability is a major concern for consumers when considering a serious financial commitment like an annuity, so a provider’s financial strength rating was also rated heavily.
The availability of a provider (how many states they are offered in) and their annual direct premiums sold provide an excellent way to capture the reach and success of a company. But these variables received smaller weights to account for the fact that smaller companies with strong offerings may still be good choices even if they are not as widely available.
The Process of Creating Our Ratings
Every provider that Annuity.org reviewed received a rating on a scale of five stars for each of the four categories.
For example, a company with a Financial Strength Rating of A+ would receive five stars for that category, while a company of B++ would receive three stars.
After determining the rating for each category, a company’s four scores were then averaged together using the weights listed above. The final number was used as that company’s star rating. All companies’ final ratings are presented on a scale of one to five stars.
Here is an example of how a hypothetical company’s rating would be calculated. Say that this company:
- Received an NAIC score of 0.30 (which means there were fewer complaints than average)
- Received a Financial Strength Rating of B++
- Sold $850 million in direct premiums
- Is available in all 50 states
The company is then given a star rating for each variable. It would receive five stars for its NAIC score, three stars for its Financial Strength Rating, four stars for its direct premiums sold and five stars for its availability.
Those four numbers are then averaged together based on the weights of each category. This means that the five stars from the NAIC score account for 35% of the final grade, while the five stars from being available in all states accounts for just 15%.
The company would receive a final rating of 4.2 stars.
Compare Annuity Provider Star Ratings
|Atlantic Coast Life
|Clear Spring Life
|Fidelity and Guaranty
|Lincoln Financial Group
|Mutual of Omaha
|National Life Group
|New York Life
|Oceanview Life and Annuity
|Talcott Resolution Life