Thank you so much for posting the updated Impairment Rate report! It is very helpful. It is interesting that longer term (10+ years), that B++ companies have lower impairment rates than A- companies. That information is not really actionable as I would not consider a ten year MYGA and I would only do a SPIA with an A++ company but it is interesting.Based on an AM Best chart showing Cumulative Gross Impairment Rates (1977–2018) that was posted some time ago in this thread (I can no longer locate it), I previously decided to avoid MYGAs longer than three years from B++-rated insurers.
In that earlier chart, B++-rated companies had average cumulative impairment rates of 2.26%, 3.29%, and 4.30% over 3-, 4-, and 5-year periods, respectively.
AM Best has since released an updated study, “Average Cumulative Impairment Rates (FSR), 1977–2023,” available here:
https://web.ambest.com/docs/default-sou ... o-2023.pdf
I would post the chart itself, but the report prohibits reproduction without express permission.
In the updated chart, B++-rated insurers show substantially lower average cumulative impairment rates of 0.96%, 1.22%, and 1.51% over 3-, 4-, and 5-year periods, respectively. A key change is that AM Best has shifted from reporting gross impairments to net impairments, counting only insurers that still had an active AM Best rating (FSR or ICR) at the time of impairment.
In theory, this methodological shift could introduce survivorship bias by excluding insurers whose ratings were withdrawn shortly before impairment. On the other hand, net impairment rates are more comparable to the “default” rates used by other credit rating agencies for corporate debt. I’m not sure how frequently financially troubled insurers flee AM Best ratings as conditions deteriorate. Any data on that?
To be candid, I’m unsure how to interpret all of this. For the first time, I’m considering a 5-year MYGA from a B++-rated insurer (American Gulf) offering a very attractive 6.3% rate (6.15% with death benefit) and a relatively low $10k minimum premium. A 4.3% impairment rate gives me pause; a 1.51% rate, especially while staying well within my state’s guaranty association limits, feels much more acceptable.
Thoughts?
In terms of MYGA, my risk tolerance is higher than others in this thread in that I am comfortable with a B++ rated company for a 5-year MYGA within my state guarantee limits and currently have MYGAs from B++ companies Canvas/Puritan Life and Revol One. I would be very interested in the American Gulf 5-Year MYGA but alas they are not licensed in my State (Wisconsin). That is likely because American Gulf does not see enough customers to get licensed in Wisconsin but I also note that Wisconsin has a reputation for being more stringent than many states (California and New York excluded). For example, I do not believe the Sentinel Life/A-Cap companies were licensed in Wisconsin so although Wisconsin residents were not able to purchase MYGAs from those companies they also avoided the heartburn of their potential financial challenges.
Thanks again for providing the updated impairment report.
Statistics: Posted by Zosima — Thu Jan 08, 2026 9:05 am — Replies 4060 — Views 754441