What does a financial rating indicate about an insurer?

A financial rating serves as an assessment of an insurer's financial health and stability, specifically its ability to meet its financial obligations, such as paying out claims to policyholders. Rating agencies evaluate various factors to determine this capability, including income, asset levels, claims reserves, and overall financial management. A strong rating indicates that the insurer is in a good position to fulfill its responsibilities, which gives policyholders and prospective clients confidence in its reliability.

The other options do not accurately reflect what a financial rating conveys. For instance, market share is more about the insurer's standing in the industry rather than its financial stability. The age of the insurance company could provide some context about its experience but does not directly speak to its financial health. Lastly, while policyholder satisfaction is crucial for understanding customer relations, it is not a component of financial ratings and does not impact the determination of an insurer’s ability to meet financial commitments.