An AM Rating is a measure of an insurance company's financial strength and creditworthiness. AM Best, a global credit rating agency, issues these ratings based on an insurer’s ability to meet its financial obligations.

Annuity companies with high AM ratings (e.g., A or higher) are generally considered more reliable, as they have consistent financial stability.

An S&P Rating, issued by Standard & Poor’s (S&P), measures a company’s creditworthiness and financial stability. These ratings are widely used to evaluate companies' financial strength based on their ability to meet debt obligations and pay out future claims.

The ratings range from AAA (highest) to D (default), with ratings at or above BBB considered investment-grade. 

A high S&P Rating (e.g., AA or higher) suggests that the annuity company is stable and reliable, providing greater confidence in the security of your investment.

Financial ratings provide insight into a company’s ability to meet its future obligations, which is especially important when buying an annuity intended to support retirement income. High ratings generally suggest the company is financially stable and more likely to meet long-term payouts.

When selecting an annuity company, you want to ensure the long-term payout is guaranteed. To check the ability of a company to stick to its promise, you should base your decision on the following factors:

• Financial Ratings: Look up the company’s financial strength ratings from agencies like AM Best, Moody’s, and Standard & Poor’s. High ratings generally mean the company is financially sound and less likely to face solvency issues.
• Product Variety: Choose a company that offers a range of annuity products, including fixed, variable, and indexed annuities. This flexibility lets you pick a product that suits your goals.
• Fees and Expenses: Different annuities come with different fees, such as administrative fees, surrender charges, and mortality and expense risk charges. Choose a company with transparent pricing and no hidden fees.
• Customer Service: Strong customer service can be a valuable asset, especially if you have questions about your annuity or need to adjust your strategy.