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Be Wise With Money

Financial Strength Ratings: What Do They Mean for You?

Why it’s important to look at financial ratings from independent agencies


Are you on the cusp of making a big financial decision?

Before any purchase, you commit to doing your homework in advance. For example, when you're looking at buying a house, you probably schedule an inspection first. For a car, you likely check out reviews to compare factors like the frequency of repairs, engine power and safety. Dealers and automakers all may say their cars are best, but you want an objective assessment so you’re prepared to make the best decision possible.

The same applies when choosing a financial professional – you probably ask your friends and family for recommendations. But how do you know the company they work for is credible? The evaluations provided by financial ratings agencies such as AM Best and Fitch Ratings are an excellent place to start.

What financial ratings agencies evaluate

You can think of the ratings as a report card issued by an independent agency. The ratings serve as an external verification of a financial organization's strength and its ability to keep the promises it has made to clients and members. Because all companies are measured against the same requirements, it's a good benchmark for comparing their financial health and strength.

So what are the main agencies? And how do you decide which financial services company to trust with your hard-earned money?

Financial ratings agencies – who they are & how they work

There are a number of ratings agencies, including AM Best and Fitch Ratings, among others. Thrivent Financial is rated by AM Best and Fitch Ratings, both of which are registered with the U.S. Securities and Exchange Commission as Nationally Recognized Statistical Rating Organizations. Each agency reviews Thrivent at least once a year, and sometimes twice.

"The rating agencies look at several areas to evaluate our financial health, including our business profile, operating performance, risk management and overall balance sheet strength” says Paul Zastrow, who leads Thrivent's corporate accounting team.

Once they've closely and scrupulously examined and analyzed these and other factors, the agencies then give a company a letter "grade," or credit rating. By and large, these ratings are pretty close to the A-F range found in schools. For example, AM Best has six grades for entities it deems "secure," from a top rating of A++ (Superior) to B+ (Good). Ratings below those are considered in the "vulnerable" range.

For more than 20 years, Thrivent Financial has earned the highest possible rating from AM Best: A++ (Superior), highest of its 16 ratings (last rated May 2019). Fitch Ratings has consistently given Thrivent very strong ratings for more than a decade – recently rated AA+ (Very Strong), second highest of its 21 categories (last rated May 2019). Keep in mind that ratings reflect Thrivent's overall strength and claims-paying ability but do not apply to the performance of investment products.

"Our members rely on us to be strong and stable,” says Zastrow. “We’re proud that we have received consistently high ratings from outside agencies. It demonstrates that we can deliver on the promises we make to our members and be there for them when they need it the most.”

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