In a further example of the tightening of standards and current paranoia among credit rating agencies, John Hancock had its AM Best rating dropped last Friday from A++ to A+.
While I'm sure this is annoying and a source of concern at Hancock in Boston (as well as in Toronto at Manulife), I wouldn't lose any sleep over the safety and solvency of this company if you’re considering using them for a structured settlement annuity.
This financial giant -- a combination of one of the oldest life insurance companies in the U.S. and the largest life insurance company in Canada -- isn’t exactly a wild and crazy bunch. They have always enjoyed superior credit ratings and business prospects. An A+ rating is still very good. The combined entity is in the largest size15 classification, and isn’t going away in my opinion.
Still, it highlights the fact that few companies will continue enjoying top ratings, having them reserved instead for the likes of NY Life, Mass Mutual, Northwestern and others. The bottom line is we’re all going to have to get used to a new strata of companies. A few will remain at the pinnacle, followed by a second tier of excellent firms, rounded out by a third level of good firms with business issues or capitalization questions that make using them somewhat problematic.