What does a financial strength rating represent?

A financial strength rating serves as an assessment of an insurance company’s ability to meet its ongoing financial obligations to policyholders. This rating acts much like a report card, providing insights into a company’s overall financial health, including factors such as its asset base, liabilities, earnings stability, and other financial metrics. Insurance companies with higher ratings are generally seen as more stable and likely to honor claims, which can greatly influence consumers’ purchasing decisions and the overall trust in the insurer.

This explanation highlights why option B is the correct choice, as it directly correlates to the intention and function of a financial strength rating in evaluating an insurance company's capability to fulfill its commitments. Other choices do not reflect the core purpose of a financial strength rating, as they focus on aspects unrelated to financial stability, such as marketing effectiveness, market share, or pricing strategies.