Evaluating the annuity

Because the settlement payments will come from the annuity issuer at various times in the future, it is important to evaluate the financial strength of the annuity issuer and the surety that might be called upon to make such payments. 

The victim or his or her representative should review either a financial statement or another competent source of financial information about each company. Financial statements often are found on insurance companies' websites.

Start with the Directory of Insurance Companies on the Internet. After finding the company's website, locate the investors' section. Locate the most recent SEC filings, especially the 10-K.

The company that issues the annuity should be of substantial size and have at least $100,000,000.00 of capital and surplus, exclusive of any mandatory security valuation reserve. The victim or representative also should obtain current ratings from any of the following rating companies:

• A.M. Best (accept only A+, A+g, A+p, A+r, or A-s). At the home page of their website, enter the name of the life company, and then establish a free account when asked to do so.
• Standard & Poor's Corporation Insurer Claims Paying Ability Rating (AA-, AA, AA+ or AAA). At the home page of their website, select Insurer Profiles.
• Moodys Investors Service Claims Paying Rating (Aa3, Aa2, Aa1 or Aaa). A very frustrating and difficult website. Click on Ratings.
• Duff & Phelps Credit Rating Company Insurance Company Claims Paying Ability Ratings (AA-, AA, AA+ or AAA)

A great website to get ratings and other information about insurance companies and insurance topics is Insurance Quotes.