Released: August 17, 2008

Insurers avoid getting soaked in subprime storm

Source: Jane Bryant Quinn, Washington Post (Free Registration)

The one financial industry that seems to be dodging the subprime bullet is insurance. Only a handful of companies have had their safety ratings knocked down because of an excessive exposure to Wall Street’s toxic waste. The vast majority have enough capital to withstand the known problems on their balance sheets, the rating companies all say.

Nevertheless, you should pay attention to the downgrades when you’re shopping for a new insurance policy or annuity. You buy insurance to transfer risk, not to take it on yourself, said David Schiff, editor of Schiff’s Insurance Observer, an industry newsletter. You want super safety from a highly rated firm. With 30 to 50 insurers rated A+ or higher from A.M. Best and AA or higher from the other rating companies, there’s no point settling for anything less, he said.

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