Now is the time for consumers to insist on dealing with financially sound homeowners insurers. In 2008, insurers paid 3.9 million claims for damage in 40 states resulting from 37 catastrophes, according to a preliminary analysis released in January by ISO’s Property Claim Services Unit.  Insurers are expected to pay out a total of $25.2 billion on those catastrophes. Ratings recently completed its quarterly review of the financial strength of homeowners insurance companies, identifying 19 widely available companies worthy of an "excellent" financial strength rating of A+, A, or A-. The companies on the list are those that had total annual premium volume in 2007 (the most recent full-year data available) of $100 million or more, indicating they offer coverage in several states. Ratings determines the financial strength of an insurance company by measuring a company's performance over time in many areas, including capitalization, profitability, reserve adequacy, liquidity and stability of operations. Insurers with the highest financial strength ratings are those with conservative underwriting practices that accurately price the risks they assume and set aside a sufficient amount of reserves to pay future claims while consistently earning profits to build capital. 

High rated companies may not be immune to problems during difficult economic times, but because of their historically sound practices, they have buit up the capital to withstand tough times. On this page we explore the strongest insurers; on the next page, the largest.

Strongest Homeowners Insurers
The top two insurers on our list, United Services Automobile Association and USAA Casualty Insurance Co., reach a sizable amount of customers. Although they only sell coverage to those in the military and their families, memberships are for life—meaning the child of a current or former military person who joins can go on to cover spouses and children, and so forth. The club gets pretty big, as evidenced by the $2.5 billion in premiums these two companies collected in 2007.

Third on the list, Interinsurance Exchange of the Automobile Club is actually more familiar than people might think.  It underwrites the auto coverage for the American Automobile Association. The nationwide AAA often offers discounted coverage to its members, so it is definitely worth checking out the rates from this financially strong insurer.

The most familiar name on the list is Allstate Insurance Co., a unit of Allstate Corp (Stock Quote: ALL), with an A- financial strength rating. Although Allstate has taken its share of knocks during this financial crisis, the homeowners insurer is sound.

The list also contains a number of smaller regional insurers with premiums in the range of $100 to $300 million that are worthy of a serious look by consumers who are shopping around.

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Largest Homeowners Insurers
Having a large household name doesn’t mean a company gets special treatment in the measure of financial strength. However, size and diversification are important and are factored into’s analysis. Several of the largest homeowners insurers may also be worthy of a look by consumers.

Of course, several State Farm and Allstate units make the list. Other well-known names such as Nationwide and Liberty Mutual also appear. Citizens Property Insurance Corp, with $1.5 billion in premiums, is best known by the residents of Florida as it is the state’s insurer of last resort.  It has been removed from this published list since it is not a private-market insurer, but it is noteworthy that this state-run insurer has reached such a scale.

Image placeholder title Ratingsissues financial strength ratings on each of the nation’s 8,600 banks and savings and loans which are available at no charge on the Banks & Thrifts Screener. In addition, the Financial Strength Ratings for 4,000 life, health, annuity, and property/casualty insurers are available on the Insurers & HMOs Screener.