For insurance, it is important that the company you are dealing with is going to be able to pay the claim if one is filed. In order to help you know which companies can be depended on, a complex rating system has been devised that tracks insurance company risks and assets and monitors their current and predicted financial stability. For consumers and investors, insurance company ratings are the best indicator of the company's health and dependability.
Standard & Poor is recognized as one of the foremost insurance rating companies, along with such names as A.M. Best. They use a reporting grade that ranges from F (very poor) to A++ (excellent). These ratings reflect how the company is expected to handle any conceivable cash outflow in the near future. For example, a company with a poor rating may not be able to handle the claims if a natural disaster created hundreds of simultaneous claims that had to be settled.
Ratings of A, A+, and A++ are gradients of a stable insurance company. Such a company is regarded as a major factor in the financial community and considered to be stable enough to handle most economic situations without undue hardship. For home and life insurance, look for ratings of A and above, and you shouldn't run into any future problems.