Leaders
Standing the Test of Time

• Lori Chordas
• July 2018
• 

Progressive Casualty Insurance Company, one of the largest U.S. auto insurers, is among the 11 property/casualty companies that have joined the ranks of insurers that have maintained an A or higher Best’s Financial Strength Rating for at least 50 years.

Progressive Mutual, which was founded in 1937, formed Progressive Casualty in 1956 to write auto insurance for high-risk drivers. The insurer has steadily grown over the years, thanks to innovations such as comparison rates and round-the-clock customer and claims services, by its parent company, Progressive. Progressive was the first major auto insurer in the world to launch a website. In 1996, customers could begin obtaining comparison rates online, and the following year, they could purchase auto policies online in real time.

In 2017, Progressive Casualty had more than $6.5 billion in net premiums and $8.4 billion in total admitted assets, according to A.M. Best. Last year, more than half of its business was in private passenger auto liability and 34% was devoted to the auto physical line.

Along with Progressive Casualty, several other insurers with sizable auto books of business have been added to the list of companies that have each maintained an A or higher rating since 1968. They include American Standard Insurance Company of Wisconsin, Grange Mutual Casualty and Mercury Casualty Co.

Other members of that group are American Commerce Insurance Co., Auto-Owners Insurance Co. and St. Paul Mercury Insurance Co.

Other property/casualty insurers that have kept their A or better Financial Strength Rating intact for at least 50 years or more include 21st Century Security Insurance Co., Hawkeye-Security Insurance, Hiscox Insurance Co. Inc. and Great American Alliance Insurance Co.

On the life side, American General Life Insurance Co., a unit of American International Group, has maintained an A or higher rating since 1968. It was incorporated in 1960 in Texas.

Vigilant Insurance Co. has joined the list of insurers on the property/casualty side with an A or better rating for 75 consecutive years. The company has maintained an A+ or higher rating since 1943.

Overall, 75 companies—57 property/casualty writers and 18 life/health insurers—have stood the test of time by retaining a Best’s Financial Strength Rating of A or higher for at least 50 consecutive years. Eighty-three companies—66 property/casualty insurers and 17 life/health insurers—have kept their A or higher rating intact for 75 years or more.

The insurance industry faces many challenges including market shifts, mergers, financial crises, natural and man-made disasters, regulation and disintermediation. But the 158 companies that have stood the test have ridden the waves of change and succeeded against those odds.

Of the auto insurers, the oldest is Auto-Owners, founded in 1916 by Vern V. Moulton and four of his associates in one room of the Commercial Block Building in Mount Pleasant, Michigan. The company wrote exclusively in the state until 1935 when it entered Indiana.

In 1917, Auto-Owners had one book of policyholder names and $174.25 in assets. Today, the mutual insurer writes auto, home, business and life insurance in 26 states and has 2.7 million policyholders. Last year, the company had nearly $3.6 billion in net premiums and more than $15 billion in total admitted assets, according to A.M. Best.

Auto-Owners Insurance Group is the 14th-largest U.S. property/casualty insurer based on 2017 net premiums written, according to A.M. Best.

Auto-Owners consists of five property/casualty companies and a life/health/annuity carrier. Auto-Owners Insurance Life Co. was formed in 1966. In 2017, the life company had $37 billion of life insurance in force. It nets more than 48,000 applications annually.

American Commerce is the largest auto insurer in Massachusetts. The company was founded as the Automobile Club Insurance Co. in 1946 to write personal lines insurance.

American Commerce is a unit of Madrid-based Fundación Mapfre. It is one of five American subsidiaries selling insurance under the Mapfre brand name. American Commerce writes auto, conversion vehicle, golf cart, motorcycle, recreational vehicle, home and renters insurance.

Last year, American Commerce had more than $340 million in assets compared to $306 million in 2013, according to A.M. Best. Net premiums climbed from $168 million in 2013 to $194 million last year.

In 2017, nearly half of American Commerce’s business was in private passenger auto liability, with $93.8 million in net premiums in the line. Auto physical damage made up more than one-third of its business, with more than $74 million in net premiums last year.

St. Paul Mercury is a unit of Travelers Group—the 6th-largest U.S. property/casualty insurer based on 2017 net premiums written, according to A.M. Best. St. Paul Mercury was founded in 1964.

Today, the fire and casualty insurer writes auto, health, home, boat, airplane and business insurance. Last year, St. Paul Mercury had $341 million in total admitted assets, $31 million in direct premiums and $116 million in policyholders’ surplus, A.M. Best reports. About 13% of its 2017 business was in private passenger auto liability and 10.5% was in auto physical damage.

Vigilant, based in New York, was founded in 1939 as the Reserve Insurance Co. to provide general fire and marine insurance business. It was renamed Vigilant Insurance Co. in May 1941.

In 1969, the company became part of The Chubb Group. Ace Ltd. acquired Chubb Corp. in January 2016 and adopted the Chubb name globally. Chubb (AMB # 018498) is the 11th-largest U.S. property/casualty insurer based on 2017 net premiums written, according to A.M. Best.

Today, Vigilant writes homeowners, commercial multiperil, workers’ compensation and a variety of other property/casualty lines. Vigilant sells its products through agents and brokers in the United States.

On the property/casualty side, three insurers stood the test of time with 111 consecutive years with an A or higher rating: Federal Insurance Co., Hartford Fire Insurance Co. and New Hampshire Insurance Co.

On the life/health side, four carriers have retained their A or higher rating for 91 consecutive years: Northwestern Mutual Life Insurance, Penn Mutual Life Insurance, Principal Life Insurance Co. and Prudential Insurance Company of America.

112-Year Tradition

For 112 years, A.M. Best has been issuing Financial Strength Ratings or opinions on the ability of individual insurers to pay claims on the coverage they have underwritten.

A select group of carriers has consistently maintained strong Financial Strength Ratings for the past 50 and 75 years.

To identify the companies with the longest record of consistent financial strength, Best’s analysts pored over the rating agency’s proprietary data—primarily Best’s Key Rating Guides and Best’s Insurance Reports—to accumulate and verify ratings and other pertinent data dating back to 1905.

A.M. Best’s Rating Scale has changed over time in an ongoing effort to increasingly distinguish the relative financial strength of insurers and adapt to changes in the insurance industry.

Therefore, in certain circumstances it was necessary to translate or convert various older ratings to conform to the present rating scale. (Note that these translations do not represent any material change or re-evaluation of a company’s rating; they are merely a conversion from one scale to another.)

The original rating system, implemented in 1906, was devised by the company’s founder, Alfred M. Best.

In 1921, a new rating scale, General Policyholder Ratings, replaced the previously used Desirability Ratings, which applied only to property/casualty insurers.

Desirability Ratings consisted of two components: a loss-paying record, ranked on an alpha scale with "A" being the best; and a rating of management quality on a numeric scale with "1" being the best.

An Evolving Process

The rating scale adopted in 1932 had two components: the New Resource Rating, the forerunner of today’s Financial Size Category; and the General Policyholders Rating, which evolved into today’s Financial Strength Ratings.

From 1935 to 1975, A.M. Best did not assign letter ratings to life/health companies. Instead they had "comments."

In order to complete this rating history project, a translation was devised to convert these "comments" to equivalent letter ratings. For example, from 1935 to 1952, "More than Ample" was found to be equivalent to today’s "A" rating.

(Lori Chordas is a senior associate editor. She can be reached at lori.chordas@ambest.com.)