Glossary

Financial strength rating

An independent agency's grade of an insurer's ability to meet its obligations and pay claims, issued by firms such as AM Best, S&P, Moody's, Fitch and Demotech.

Also called: FSR, insurer financial rating, claims-paying ability rating, insurance company rating

A financial strength rating is an outside opinion of whether an insurer can pay its claims, now and under stress. The agencies that rate property insurers include AM Best, S&P Global, Moody's and Fitch. In some regional markets, notably Florida, Demotech rates many smaller insurers, and its scale differs from the others. Each agency uses its own letters and definitions, so an A at one is not an A at another.

Analysts weigh balance sheet strength, operating results, business mix and risk management, and for a home insurer that includes exposure to catastrophes and the reinsurance behind it. Ratings are reviewed over time, carry an outlook such as stable or negative, and can be placed under review after a big event. Always note the date.

What it does not measure is price, claim service or complaints. A highly rated insurer can still handle claims slowly, and a lower-rated one can pay promptly. For those, look at the NAIC complaint index and J.D. Power studies. Also check the company that actually issues your policy, since members of a group may be rated differently. Mortgage lenders may set minimum ratings. A rating improves the odds an insurer survives a bad year; it is not a guarantee. See Financial strength ratings: AM Best, S&P, Moody's and Demotech and how to research a home insurer in 15 minutes, and the AM Best rating entry for the best-known scale.

Last reviewed October 10, 2026

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Related terms

AM Best rating The letter grade, from A++ to D, that the insurance rating agency AM Best assigns to an insurer's ability to meet its ongoing policy obligations. Demotech rating A financial strength grade from an independent firm that rates mostly small and regional property insurers, often those AM Best and S&P do not cover. Policyholder surplus An insurer's assets minus its liabilities under statutory accounting, the capital cushion that absorbs losses beyond its reserves and premiums. Insolvency The condition of an insurer that cannot pay its claims and debts as they come due, or whose liabilities exceed its assets or required capital. Guaranty fund A state safety net, financed by charges on licensed insurers, that pays covered claims up to a cap when an insurer is declared insolvent. NAIC complaint index A ratio comparing an insurer's share of confirmed consumer complaints with its share of premium, where 1.00 means complaints in line with its size.

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Related insurers

Assurant The leading U.S. writer of lender-placed (force-placed) home insurance, which also sells manufactured home, condo and homeowners policies in select states. Co-operative Insurance Companies Member-owned Vermont insurer founded in 1915 for Grange farmers, writing home, mobile home, farm and auto coverage only in Vermont and New Hampshire. Orion180 Melbourne, Florida home insurer founded in 2016 that sells admitted and surplus lines home, FLEX and flood policies through independent agents in 14 states. Stillwater Insurance Group Jacksonville insurer, once Fidelity National's P&C arm, selling homeowners in most states via agents and partners; California is about half its premium. Travelers Publicly traded insurer founded in 1864 that sells home insurance mainly through independent agents in most states; the 7th-largest U.S. home insurer.

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Compare home insurers side by side Pick up to three home insurers and line up their size, financial strength ratings, where they sell and how to reach them, using the facts in each profile.