Weiss Ratings: Homeowners Offered Few Choices of Hurricane Insurance

Weiss Ratings Releases New Free Lists of Weakest and Strongest Insurers

JUPITER, Florida (June 28, 2010) — In most hurricane-prone states1, homeowners have few choices of insurance coverage, with just eight property and casualty insurers in each state controlling up to 77.2 % of the market share, according to Weiss Ratings, the nation’s only provider of independent insurance company ratings.

However, thanks to changes in recent years, Florida residents have more companies to select from when shopping for homeowners insurance, with eight companies controlling only 38.4% of the market share.

“After consecutive years of devastating storms across Florida, several insurers have entered the market, seeking to capitalize on shrinking capacity,” said Melissa Gannon, vice president of Weiss Ratings. “But while the risk has now been spread among more players, the financial strength of the new entrants is questionable, and consumers must monitor the health of the insurer they select, especially in light of the forecast for another active hurricane season.”

In particular, many start-up companies that received policies from the state-run insurer in recent years are financially unstable. For example, Royal Palm Insurance Company and Edison Insurance Company, which opened for business in 2006, are both rated E+ (Very Weak), while Peoples Trust Insurance Company, which began operating in 2008, is rated D- (Weak).

In Texas, eight carriers commanded 77.2% of the homeowners insurance market at year-end. In South Carolina, they held 68.2% of the market; in Louisiana, 63.3%; and in North Carolina, 61.1%, compared to 78.3%, 66%, 62%, and 58.5%, respectively, in 2002. The following table reflects the eight companies with the largest market share in all hurricane-prone states combined:2

Group
Premium in Hurricane-Prone
States ($000)
Market Share in
Hurricane-Prone
States (%)
Market Share
National (%)
Weiss
Financial
Strength
Rating
State Farm Mutual
Automobile Ins
3,594,323
21.2
21.6
B
Allstate Corp.
1,462,700
8.6
10.0
B+
Zurich Financial Services Ltd
1,035,356
6.1
7.4
C
USAA Insurance Group
1,022,334
6.0
4.4
A+
Citizens Property Ins Corp
790,756
4.7
1.2
Unrated
Nationwide Mutual Group
743,580
4.4
4.3
B
Liberty Mutual Holding Co.
660,197
3.9
5.1
C+
Travelers Cos.
515,232
3.0
4.5
B
Total
9,824,478
57.9
58.5
 

Scale: A = Excellent, B = Good, C = Fair, D = Weak, E = Very Weak. Plus sign = top third of grade; minus sign = bottom third.

Notes: The Weiss Financial Strength Rating reflects the financial condition of the largest subsidiary in each group, and ratings of smaller subsidiaries may vary to some degree. State Farm Mutual Automobile Insurance Company itself does not offer homeowners insurance while its subsidiaries do. Citizens Property Insurance Corp. writes policies only in Florida.

 

Of the 208 insurers with at least $10 million in homeowners premiums in Texas, South Carolina, Louisiana, North Carolina or Florida, Weiss Ratings gives 39 companies a grade of B+ (good) or higher, while 33 companies merit a grade of D+ (weak) or lower.

Separately, among U.S. property and casualty insurers rated by Weiss Ratings, below are the five strongest with $10 billion or more in assets and the five weakest with $2 billion or more in assets:

Strongest U.S. Property & Casualty Insurers
(with a Weiss Rating of B+ or higher and assets of $10 billion or more; 12/31/09 data)

Institution
State
Weiss Rating
Assets
($mil)
State Farm Mutual Automobile Insurance Co.
IL
B+
100,681
Allstate Insurance Co.
IL
B+
40,829
Federal Insurance Co.
IN
B+
30,688
Hartford Fire Insurance Co.
CT
B+
24,543
Travelers Indemnity Co.
CT
A-
21,250

U.S. Life & Annuity Insurers Considered Vulnerable
(with a Weiss Rating of D+ or lower and assets of $2 billion or more; 12/31/09 data)

Institution
State
Weiss Rating
Assets
($mil)
Ambac Assurance Corp.
WI
E
8,534
Mortgage Guaranty Insurance Corp.
WI
D
7,215
Medical Liability Mutual Insurance Co.
NY
D+
5,073
MBIA Insurance Corp.
NY
D+
5,033
Assured Guaranty Municipal Corp.
NY
D+
4,429
Scale: A = Excellent, B = Good, C = Fair, D = Weak, E = Very Weak. Plus sign = top third of grade; minus sign = bottom third.

 

In addition, to help consumers avoid the weakest insurers and find the strongest in their state, Weiss Ratings has released its lists of the 206 strongest and 435 weakest insurers providing coverage for homeowners, autos and business liability. Consumers can immediately receive all six of the lists at no charge by providing their email address at www.weissratings.com/pclists.

About Weiss Ratings

Weiss Ratings accepts no payments for its ratings from rated institutions. It is among the nation’s leading providers of independent ratings on 8,000 U.S. banks and S&Ls and the only provider of independent ratings on the nation’s 4,200 insurance companies.

Weiss outperformed Standard and Poor’s, Moody’s, A.M. Best and Duff & Phelps (now Fitch) in warning of future life and health insurance company failures according to a landmark study by the U.S. Government Accountability Office (GAO), while also outperforming its competitors in identifying the strongest insurers, according to its follow-up study using the GAO’s research methodology.  According to a leading consumer publication’s May 2009 study of life insurance ratings by Fitch, Moody’s, S&P, A.M Best and Weiss Ratings, Weiss Ratings (formerly TheStreet.com Ratings) “was the toughest grader with independent and objective ratings.”

Thanks to its strong track record and independence, The New York Times wrote that Weiss was “the first to see the dangers and say so unambiguously,” Barron’s wrote that Weiss is “the leader in identifying vulnerable companies” and Esquire concluded that Weiss Ratings is “the one company [that] ... provides financial grades free of any conflicts of interest.”

1 States ranked by the number of hurricane strikes between 1851 and 2004 by the National Hurricane Center (www.nhc.noaa.gov): Florida (110); Texas (59); Louisiana (49); North Carolina (46); and South Carolina (31).

2 These are the eight largest carriers in the five hurricane-prone states overall, but not necessarily the largest eight in each state.