A-/A3

DEFINITION of 'A-/A3'

This is generally the third- or fourth-highest rating that a rating agency assigns to a security or insurance carrier. It is often the lowest investment-grade rating, but it signifies that the issuer is fairly stable with relatively low default risk.

BREAKING DOWN 'A-/A3'

The ratings assigned by the various ratings agencies are based primarily upon the insurer's or issuer's creditworthiness. This rating can therefore be interpreted as a direct measure of the probability of default. However, credit stability and priority of payment are also factored into the rating.

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RELATED FAQS
  1. How long are credit ratings valid?

    Learn how credit ratings are issued and how long they are valid. Investors look to credit ratings to determine risk associated ... Read Answer >>
  2. Does a good credit rating guarantee repayment?

    Learn how credit ratings help investors determine the creditworthiness of an issuer and the risk associated with making an ... Read Answer >>
  3. Should I be worried about my insurance company?

    Yes, policyholders should also take a serious look at the financial stability of their current insurance company especially ... Read Answer >>
  4. In what types of financial situations would credit spread risk be applied instead ...

    Find out when credit risk is realized as spread risk and when it is realized as default risk, and learn why market participants ... Read Answer >>
  5. What level of default rate is typical for the credit services industry?

    Learn how default rates affect businesses in the credit services industry, and what rates are considered normal for a company ... Read Answer >>
  6. Why should I consider looking for the A.M. Best rating before investing in an insurance ...

    Find out about the rating system that A.M. Best uses to provide financial strength ratings for companies in the insurance ... Read Answer >>
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