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What is an A-rated insurance company?

Fact-checked with HomeInsurance.com

When it comes to insurance coverage, you want the best. You’re looking for a company with good customer service, a competitive price and, perhaps most important, financial strength.

Why is that important? Imagine a large hurricane — similar in impact to Katrina — devastates your region. A company without financial security won’t be able to pay out on the many claims. It takes a company with excellent creditworthiness and good business practices to meet all the claims. That’s what makes an A-rated company.

Organizations like Moody’s, Standard & Poor’s and AM Best deep dive into insurers’ financials to determine if they are managed in a fiscally responsible manner and have the cash reserves in place to pay out on large claims. Insurers that are determined to be financially strong are then assigned an “A” rating. 

What is an A-rated insurance company?

Rating organizations such as AM Best use letter-based rating systems to assign a letter to companies based on their financial strength. For example, AM Best uses a scale ranging from A (excellent financial strength) to D (poor financial strength). Standard & Poor’s rating scale is broken down into AAA, AA, A, BBB and so on. These ratings are then fine-tuned by using a plus or minus sign, or in some other way.

A-rated companies will have a documented history of claim payments as well as a balance sheet that shows the company to be on solid financial ground. Their management style should be proven successful, and their financial reserves rock-solid. Raters will pay careful attention to annual reports and balance sheets to make sure the company is fully solvent and running smoothly.

Who needs an A-rated insurance company?

You want an insurance company that can respond appropriately when you file a claim — and that ability is directly related to their creditworthiness. Any company with less than an A rating may be on shaky financial ground. 

When you are searching for insurance for your home, car, boat or any other need, it pays to assess the financial strength of each company you are considering. You may find rating information on the insurers’ websites or by going to the rating organizations’ websites.

What do A-ratings mean?

Each company uses a rating system that is unique to them. As we mentioned, they’re all based on letters, with A being the top rating, but there are differences. The Insurance Information Institute, for example, notes that an A+ from AM Best is that group’s second-highest rating. But at Standard & Poor’s, an A+ is the fifth highest rating — making an A+ from AM Best a better grade than it is from S&P. 

A-rated insurance companies

Company Standard & Poor’s Moody’s AM Best
USAAAA+AaaA++
GeicoA++Aa1A++
AmicaN/AN/AA+
State FarmAAAa1A++
AllstateAAA3A+
MetLifeAA-Aa3A+
Liberty MutualAA2A
NationwideA+A1A+
ProgressiveAAAaA+
TravelersAAAa2A++

USAA

USAA had either the highest or second-highest rating from our agencies, marking it highly creditworthy. The company sells auto, homeowners and other types of insurance to current and former military members. It is also known for a high level of customer service.

Geico

Geico, owned by Berkshire Hathaway, has possibly the best reserves of any company in the U.S. Its top-notch financial ratings put it high on our list of creditworthy insurers. A++ is the highest ranking from AM Best, and it scores only slightly lower for the other two organizations.

Amica

A smaller company known for great customer service and solid coverage options, Amica is only ranked by one of our agencies. But that rank is a high one, putting it in the “superior” category, and Amica is clearly in a financially sound position.

State Farm

State Farm is the largest insurance company in the U.S., and it offers home, property, life, health, disability and liability coverage, along with banking and investment services. Its ratings are at the top position or in second place for all our rating organizations.

Allstate

Allstate has an excellent rating from AM Best and Standard & Poor’s, but Moody’s gives it an A3, which is the seventh-highest rating mark. Even this lower grade, though, still tags it as a low credit risk and able to pay out on claims as needed.

MetLife

MetLife, which sells insurance for auto, home, dental and more, gets a slight ding from Moody’s, which gives it an Aa3, the fourth-highest ranking. The two other agencies rate it well within the bounds of an A rating, making it a great choice for creditworthiness.

Liberty Mutual

Although it doesn’t get top rankings, Liberty Mutual is solidly in the A category and is an excellent choice for homeowners, auto, motorcycle and more.

Nationwide

Nationwide’s A+ rankings from AM Best and Standard & Poor’s put it into the “superior” category with strong financial security. The A1 from Moody’s means it has a high ability to repay short-term debt and claims.

Progressive

An AA, Aa and A+ ranking put Progressive near the top of the A lists — each of these is second or third place on their lists. Progressive also ranks well for customer management and is known for low prices.

Travelers

An Aa2 from Moody’s is third place, while Travelers’ A++ from AM Best is the highest possible ranking there. To top it off, the company earns a second-place rate from Standard & Poor’s.

The takeaway

  • Rating organizations like AM Best and Moody’s rank insurers for their ability to pay out on claims and manage their financial resources — their creditworthiness.
  • Insurance shoppers should note rankings: anything less than an A is an indication of financial vulnerabilities.
  • Any of our top choices is a good option for dependable coverage and excellent claims management.

Those looking for coverage for their car, boat, home or any other type of insurance should be aware of the financial organizations such as Standard and Poor’s that rank insurers for their creditworthiness. An insurer with high credit worthiness has the financial reserves to pay out on multiple claims in the event of a disaster.

Shoppers should look for A rated companies, which are the most financially well-run, with great historical track records and good management techniques. Anything less than an A indicates that the company may be affected by adverse business or economic conditions.

Mary Van Keuren

After 30 years as a writer and editor in academia, Mary now writes full-time for the insurance and finance industries. Her work has appeared on Reviews.com, TheSimpleDollar.com and Bankrate.com, as well as other consumer-focused websites.

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