Best Insurance Companies Out There

What are the best insurance companies out there? There is no single, definitive answer to that question. Different insurance companies place emphasis on different products. Some are dedicated to their flagship auto insurance lines. Others don't offer auto insurance at all. Determining what the best insurance company is out there is ultimately a matter of personal preference.

Before considering products from any company, it is always a good idea to check with the state insurance commission to see if that company is licensed to do business in your state and if that company has had any legal or regulatory trouble. This information can be easily obtained from the state insurance commission's web site. It's also good policy to check on an insurance company's A. M. Best rating. This independent rating is based largely on the current financial strength of a given insurance carrier. After all, what good is insurance if the underwriting company can't consistently demonstrate its valid clams can be paid?

This article focuses on five companies with an A+ or A++ rating from A. M. Best and which have a longstanding nationwide presence. This is by no means intended to be an exhaustive list of the best insurance companies out there. Smaller, regional companies are often just as good if not better.

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MetLife

Founded in 1863 to provide disability insurance coverage to Civil War veterans and entering the life insurance field five years later, Metropolitan Life Insurance Company (commonly known as MetLife) grew over the years to become one the largest insurance companies in the United States. Indeed with over $3 trillion worth of life insurance in force, today MetLife is the single largest life insurance underwriter in the country. In March 2010 MetLife announced the acquisition of AIG's life insurance portfolio, which means that number stands to get even bigger.

In addition to offering a full range of life insurance and annuity products, MetLife specializes in group insurance marketed to employers. The company is a leader in group dental and disability, underwriting benefits for 90 of the Fortune 100.

In 2001 MetLife became the first major insurance company to get into the retail banking business, a strategy which many of its competitors have since embraced as well. With the acquisition of First Horizon National Corporation in 2008, MetLife Bank entered the home mortgage business.

Prudential

Originally known as the “Widows and Orphans Friendly Society” when it was founded in 1875, Prudential grew from a company which offered a single insurance product – burial insurance – to an extremely comprehensive financial services provider. Smaller than MetLife in terms of life insurance business, Prudential's book of business nonetheless very impressive, exceeding $2 trillion worth of life insurance policies in force.

Although many companies retreated to their core businesses during the current recession, like MetLife Prudential's business scope remains far-reaching. In addition to providing life insurance and annuities, Prudential through its subsidiaries offers group life and disability insurance, a full service stock brokerage and real estate services.

Allstate

Allstate is actually a conglomeration of 15 separate companies based in the United States and Canada. Founded in 1931 by Sears, Roebuck and Co., Allstate remained part of the department store conglomerate until the early 1990s.

Allstate is an example of a “multi-line” insurance company, or one that sells a wide variety of insurance products. Although Allstate is better known as a property-casualty (or P&C) insurer offering auto and home insurance, it also sells the usual compliment of fixed life and annuity products through its Northbrook, Illinois-based Allstate Life Insurance Company subsidiary. Products in certain states may be available through one of its other subsidiary companies due to differing legal environments.

Allstate offers variable life and annuity products through yet another subsidiary, Allstate Financial Services, LLC. This company is known as a “broker/dealer,” and is dedicated specifically to the sale of variable insurance and related products. This corporate arrangement of specialized subsidiaries is fairly common among large multi-line insurers.

Allstate utilizes a “captive agent” sales force, which means that insurance agents appointed by Allstate are contractually obliged to sell Allstate insurance products exclusively unless Allstate is unable or unwilling to insure a particular risk.

Unlike MetLife, which also sells P&C products, Allstate's focus is clearly on property and liability lines, which in 2008 comprised over 90 percent of total company revenue.

State Farm

State Farm was founded in 1922 as an auto insurer targeting Midwestern farmers, who company founders believed were a safer risk than the general population. Today State Farm is the top underwriter of auto and home insurance in the United States and has a significant presence in Canada as well. Like Allstate, State Farm offers life insurance products in both fixed and variable variations, but lags far behind major life insurance players such as MetLife and Prudential in terms of policies issued. To address that, the company strongly encourages its agents to “cross-sell” life insurance products with its well-known P&C lines.

State Farm and Allstate have much in common. Both are large multi-line insurers which offer life and annuity products but emphasize property-casualty products. Both employ captive agent sales forces. Both utilize several subsidiary companies including a broker/dealer for variable products. Both followed MetLife's lead and are now in retail banking. Finally, both are headquartered in Illinois (Allstate in the Chicago suburb of Northbrook, State Farm downstate in Bloomington).

A key difference between State Farm and Allstate is that State Farm is a mutual insurance company. By definition, a mutual insurance company is policyholder-owned which may pay dividends to policyholders (as State Farm did to auto insurance customers in 46 states and the District of Columbia in 2007). Conversely, Allstate is a publicly traded corporation.

While many insurance carriers are founded as mutual companies, over time they may find raising capital difficult under that business model. Consequently companies and policyholders may choose vote to demutualize and go public. MetLife demutualized in 2000 and Prudential followed suit the following year.

Mutual of Omaha

Perhaps best known for its sponsorship of the long-running "Wild Kingdom" television series, the century-old Mutual of Omaha is also one of the country's leading life insurance underwriters.

More so than MetLife or even Prudential, Mutual of Omaha places an emphasis on life insurance and annuity products, only entering the employer benefits field in earnest the 1980s and retail banking in 2007. Like Prudential, Mutual of Omaha does not sell property-casualty products such as auto and home insurance. However, through its Continuum Worldwide subsidiary Mutual of Omaha offers consulting services in operational risk management.

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