What do the Weiss Ratings mean?
Weiss Ratings issues Financial Strength Ratings on more than 11,000 financial institutions, including banks, S&Ls, life and annuity insurers, health insurers, and property and casualty insurers, with the following scale:
A = excellent
B = good
C = fair
D = weak
E = very weak
+ = the upper third of each grade range
- = the lower third of each grade range
Weiss Ratings of Banks and Thrifts
Weiss Ratings represent a completely independent, unbiased opinion of an institution's financial safety — now, and in the future. The ratings are derived, for the most part, from quarterly financial statements filed with federal regulators. Although we seek to maintain an open line of communication with the companies being rated, we do not grant them the right to influence the ratings or stop their publication.
Weiss Ratings are assigned by our analysts based on a complex analysis of hundreds of factors that are synthesized into five indexes: capitalization, asset quality, profitability, liquidity and stability. These indexes are then used to arrive at a letter grade rating. A good rating requires consistency across all indexes. A weak score on any one index can result in a low rating, as insolvency can be caused by any one of a number of factors, such as inadequate capital, poor underwriting practices, operating losses, or the failure of an affiliated company.
The primary components of the Weiss Financial Strength Rating are as follows:
Weiss Ratings maintains an open-door policy to rated companies and accepts input via mail, fax, phone, or personal visits. If a company feels it has significant additional information it wants to bring to our attention which is not addressed in the quarterly financial statements, it is invited to provide that information at any time. However, we reserve the right to publish ratings expressing our opinion of a company's financial stability based exclusively on publicly available data and our own internally developed standards for safety.
| Rating Definition | |
| A | Excellent. The institution offers excellent financial security. It has maintained a conservative stance in its business operations and underwriting practices as evidenced by its strong equity base, top-notch asset quality, steady earnings, and high liquidity. While the financial position of any company is subject to change, we believe that this institution has the resources necessary to deal with severe economic conditions. |
| B | Good. The institution offers good financial security and has the resources to deal with a variety of adverse economic conditions. It comfortably exceeds the minimum levels for all of our rating criteria, and is likely to remain healthy for the near future. Nevertheless, in the event of a severe recession or major financial crisis, we feel that this assessment should be reviewed to make sure that the company is still maintaining adequate financial strength. |
| C | Fair. The institution offers fair financial security, is currently stable, and will likely remain relatively healthy as long as the economic environment avoids the extremes of inflation or deflation. In a prolonged period of adverse economic or financial conditions, however, we feel this company may encounter difficulties in maintaining its financial stability. |
| D | Weak. The institution currently demonstrates what we consider to be significant weaknesses which could negatively impact depositors or creditors. In an unfavorable economic environment, these weaknesses could be magnified. |
| E | Very Weak. The institution currently demonstrates what we consider to be significant weaknesses and has also failed some of the basic tests that we use to identify fiscal stability. Therefore, even in a favorable economic environment, it is our opinion that depositors or creditors could incur significant risks. |
| F | Failed. The institution has been placed under the custodianship of regulatory authorities. This implies that it will be either liquidated or taken over by another financial institution. |
| + | The plus sign is an indication that the institution is at the upper end of the letter grade rating. |
| - | The minus sign is an indication that the institution is at the lower end of the letter grade rating. |
| U | Institutions. The institution is unrated due to insufficient data at the time its rating was updated. |
Weiss Ratings of Insurance Companies
Weiss Ratings represent a completely independent, unbiased opinion of an insurance company's financial safety — now, and in the future. The ratings are derived, for the most part, from annual and quarterly financial statements obtained from state insurance commissioners. This data is supplemented by information that we request from the insurance companies themselves. Although we seek to maintain an open line of communication with the companies being rated, we do not grant them the right to influence the ratings or stop their publication.
Weiss Ratings are assigned by our analysts based on a complex analysis of hundreds of factors that are synthesized into a series of indexes: capitalization, investment safety (L&H companies only), reserve adequacy (P&C companies only), profitability, liquidity, and stability. These indexes are then used to arrive at a letter grade rating. A good rating requires consistency across all indexes. A weak score on any one index can result in a low rating, as insolvency can be caused by any one of a number of factors, such as inadequate capital, unpredictable claims experience, poor liquidity, speculative investments, inadequate reserving, or consistent operating losses.
The primary components of the Weiss Financial Strength Rating are as follows:
Weiss Ratings maintains an open-door policy to rated companies and accepts input via mail, fax, phone, or personal visits. If a company feels it has significant additional information it wants to bring to our attention which is not addressed in our quarterly company survey, it is invited to provide that information when responding to the survey or at any other time. However, in the absence of a response from the company to our survey, we reserve the right to publish our rating based exclusively on publicly available data, which we feel is sufficient to derive an accurate rating.
| Rating Definition | |
| A | Excellent. company offers excellent financial security. It has maintained a conservative stance in its investment strategies, business operations and underwriting commitments. While the financial position of any company is subject to change, we believe that this company has the resources necessary to deal with severe economic conditions. |
| B | Good. The company offers good financial security and has the resources to deal with a variety of adverse economic conditions. It comfortably exceeds the minimum levels for all of our rating criteria, and is likely to remain healthy for the near future. However, in the event of a severe recession or major financial crisis, we feel that this assessment should be reviewed to make sure that the firm is still maintaining adequate financial strength. |
| C | Fair. The company offers fair financial security and is currently stable. But during an economic downturn or other financial pressures, we feel it may encounter difficulties in maintaining its financial stability. |
| D | Weak. The company currently demonstrates what we consider to be significant weaknesses which could negatively impact policyholders. In an unfavorable economic environment, these weaknesses could be magnified. |
| E | Very Weak. The company currently demonstrates what we consider to be significant weaknesses and has also failed some of the basic tests that we use to identify fiscal stability. Therefore, even in a favorable economic environment, it is our opinion that policyholders could incur significant risks. |
| F | Failed. The company is deemed failed if it is either 1) under supervision of an insurance regulatory authority; 2) in the process of rehabilitation; 3) in the process of liquidation; or 4) voluntarily dissolved after disciplinary or other regulatory action by an insurance regulatory authority. |
| + | The plus sign is an indication that the company is at the upper end of the letter grade rating. |
| - | The minus sign is an indication that the company is at the lower end of the letter grade rating. |
| U | Unrated Companies. The company is unrated for one or more of the following reasons: (1) total assets are less than $1 million; (2) premium income for the current year was less than $100,000; or (3) the company functions almost exclusively as a holding company rather than as an underwriter; or (4) we do not have enough information to reliably issue a rating. |
Weiss Ratings of Sovereign Debt
Weiss Sovereign Debt Ratings represent a completely independent, unbiased opinion of a country’s financial stability. The ratings are derived from data published by the International Monetary Fund and other governmental sources. They are based on an analysis of factors that are categorized into four indexes:
| Rating Definition | |
| A | Excellent. The country’s government finances are in excellent condition. It has consistently managed its budget and debts very well; the backing for its currency is strong; risk stemming from economic instability is minimal; and it retains an excellent ability to raise money in global markets. Investors in the country’s bonds face risks strictly associated with rising global interest rates and currency fluctuations. |
| B | Good. The country’s government finances are in good overall financial condition, with at least good scores in all, or nearly all, rating criteria — debt, global stability, macroeconomic factors and borrowing ability while harboring no significant weaknesses in any of these categories. Investors in the country’s bonds face mostly normal risks associated with rising global interest rates and currency fluctuations. |
| C | Fair. The country is in fair financial condition and is currently stable although it may display weaknesses in one or more areas. However, in the event of adverse economic or market conditions, it may encounter difficulties in maintaining its financial stability. Investors in the country’s government securities face potential losses if there are sustained market declines in the country’s medium- or long-term government securities exceeding those stemming strictly from rising inflation. Investors could also be exposed to sustained losses stemming from a serious decline in the nation’s currency. |
| D | Weak. The country is in a weak financial condition, demonstrating poor results on more than one of the rating criteria. It may be overburdened with debts; suffer from inadequate currency reserves; have persistent difficulties in sustaining economic growth; or be unable to raise funds in global debt markets. Investors face not only large risks from market declines in the nation's bonds and currency but also sharply rising risk premiums due to spreading fears of default. Investment in the country's debt securities is speculative. Global investors face the risk of default or de-facto default resulting in sharply falling values of the nation's currency and/or bond prices. |
| E | Very Weak. The country has very severe financial weaknesses that make investment in its securities extremely risky. It fails to achieve adequate scores in nearly every major category. Investors face very high and immediate risks of loss due to sharp bond price declines, currency collapses or outright default. Any investment in these country’s public or private securities must be considered extremely speculative. |
| F | Failed. The company is deemed failed if it is either 1) under supervision of an insurance regulatory authority; 2) in the process of rehabilitation; 3) in the process of liquidation; or 4) voluntarily dissolved after disciplinary or other regulatory action by an insurance regulatory authority. |
| + | The plus sign is an indication that the country is at the upper end of the rating. |
| - | The minus sign is an indication that the country is at the lower end of the rating. |
What Do TheStreet Ratings Mean?
TheStreet Ratings of Common Stocks
A (Buy) Excellent
The company’s stock has an excellent track record for providing strong performance with minimal risk, and it is trading at a price that represents good value relative to the company’s earnings prospects. While past performance is just an indication – not a guarantee – we believe this stock is among the most likely to deliver superior performance relative to risk in the future. Although even the best stocks can decline in a down market, Wall Street analysts interpret our “A” rating as a Buy.
B (Buy) Good
The company’s stock has a good track record for delivering a balance of performance and risk. While the risk-adjusted performance of any stock is subject to change, we believe that this stock is a good value, with good prospects for outperforming the market. Although even good investments can decline in a down market, Wall Street analysts interpret our “B” rating as a Buy.
C (Hold) Fair
In the trade-off between performance and risk, the prospects for the company’s stock are about average based on its track record and current valuation. Thus, we feel it is neither a significantly better nor a significantly worse investment than most other common stocks. Wall Street interprets this rating as a Hold.
D (Sell) Weak
The company’s stock is an underperformer relative to other common stocks with a similar amount of risk. While the risk-adjusted performance of any common stock is subject to change, we believe that this stock represents a poor investment based on its current valuation and the company’s current financial position. Even weak stocks can rise in an up market. However, Wall Street interprets our “D” rating as a Sell.
E (Sell) Very Weak
The prospects for the company’s stock are not good, with significant downside risks outweighing any upside potential. This opinion is based on the company’s current financial condition in combination with the stock’s historical riskadjusted performance and current valuation. While the risk-adjusted performance of any stock is subject to change, we believe this stock is a poor investment risk. Even some of the weakest stocks can rise in certain market conditions. However, Wall Street interprets our “E” rating as a Sell.
F Bankrupt
Our “F” rating means that the company issuing this stock is currently in bankruptcy proceedings, and that it remains under active coverage. The decision to retain bankrupt companies' stocks under active coverage is based on factors such as data availability and quality, and is made on a discretionary basis. Typically, shareholders in a bankrupt company lose their entire investment when the company emerges from Chapter 11 reorganization or liquidates under Chapter 7. Therefore, we feel this stock has substantial downside risk for investors and very little, if any, upside potential.
+ The plus sign
An indication that the stock is at the upper end of the letter grade rating.
- The minus sign
An indication indication that the stock is at the lower end of the letter grade rating
U Unrated Stocks
The stock is unrated for one or more of the following reasons: 1) It is too new to make a reliable assessment of its risk-adjusted performance. (Typically, a stock must have traded for at least one year before it is eligible to receive a TheStreet.com Investment Rating.); 2) Quarterly reports filed with the SEC were either late or missing critical items that TheStreet.com Ratings deems necessary for a thorough analysis; 3) Data anomalies exist that call into question either the accuracy or completeness of the information presently available to TheStreet.com Ratings.
TheStreet Ratings of Mutual Funds
A Excellent
The mutual fund has an excellent track record for maximizing performance while minimizing risk, thus delivering the best possible combination of total return on investment and reduced volatility. It has made the most of the recent economic environment to maximize risk-adjusted returns compared to other mutual funds. While past performance is just an indication – not a guarantee – we believe this fund is among the most likely to deliver superior performance relative to risk in the future.
B Good
The mutual fund has a good track record for balancing performance with risk. Compared to other mutual funds, it has achieved above-average returns given the level of risk in its underlying investments. While the risk-adjusted performance of any mutual fund is subject to change, we believe that this fund has proven to be a good investment in the recent past.
C Fair
In the trade-off between performance and risk, the mutual fund has a track record which is about average. It is neither significantly better nor significantly worse than most other mutual funds. With some funds in this category, the total return may be better than average, but this can be misleading since the higher return was achieved with higher than average risk. With other funds, the risk may be lower than average, but the returns are also lower. In short, based on recent history, there is no particular advantage to investing in this fund.
D Weak
The mutual fund has underperformed the universe of other funds given the level of risk in its underlying investments, resulting in a weak risk-adjusted performance. Thus, its investment strategy and/or management has not been attuned to capitalize on the recent economic environment. While the risk-adjusted performance of any mutual fund is subject to change, we believe that this fund has proven to be a bad investment over the recent past.
E Very Weak
The mutual fund has significantly underperformed most other funds given the level of risk in its underlying investments, resulting in a very weak riskadjusted performance. Thus, its investment strategy and/or management has done just the opposite of what was needed to maximize returns in the recent economic environment. While the risk-adjusted performance of any mutual fund is subject to change, we believe this fund has proven to be a very bad investment in the recent past.
+ The plus sign
An indication that the fund is in the top third of its letter grade.
- The minus sign
An indication that the fund is in the bottom third of its letter grade.
U Unrated Funds
The mutual fund is unrated because it is too new to make a reliable assessment of its risk-adjusted performance. Typically, a fund must be established for at least three years before it is eligible to receive a TheStreet.com Investment Rating.