Frequently Asked Questions

Which institutions are included in the Weakest and Strongest lists?

What might happen if my insurance company fails?

Suppose I cannot find a strong bank near me?

What do the Weiss Ratings mean?

Weiss Ratings issues Financial Strength Ratings on more than 12,000 financial institutions, including banks, S&Ls, life and annuity insurers, health insurers, and property and casualty insurers, with the following scale:

A = excellent
B = good
C = fair
D = weak
E = very weak
+ = the upper third of each grade range
- = the lower third of each grade range

Click here for more details on bank ratings.

Click here for more on insurance company ratings.

Which institutions are included in the Weakest and Strongest lists?

The Weiss Ratings Weakest Lists include only institutions with a Weiss Financial Strength Rating of D+ or lower — institutions we believe to be “vulnerable” to future financial difficulties or even failure, based on our analysis of their capital, asset quality, earnings, liquidity and other factors. Most “vulnerable” institutions will not ultimately fail. However, we believe that the risk of failure is higher.

The Weiss Ratings Strongest Lists include only institutions with a Weiss Financial Strength Rating of B+ or higher. Weiss Ratings does not guarantee that all of these institutions are completely safe. However, we believe that the risk of failure is very low.

What might happen if my bank fails?

Typically, when a bank fails, the Federal Depositors Insurance Corporation (FDIC) finds a merger partner or takes it over. However, in the recent debt crisis, when some very large banks were believed to be in financial danger, Congress and the U.S. Treasury Department intervened directly to provide emergency loans.

In either case, there are risks you should be aware of, depending on three possible situations:

Situation #1. You are a shareholder in a bank that’s failing. In this situation, if the bank you’ve invested in fails, you could lose all or most of your money. The value of the stock could fall — temporarily or permanently — to nearly zero.

Situation #2. You are an insured depositor. You have savings or checking accounts with the bank and they are under the FDIC insurance limit. In this situation, the chances of losing money are very small and your money should be safe. However, you could miss out on promised interest income, lose access to lines of credit and suffer other serious inconveniences.

Situation #3. You have deposits with a bank that are over and beyond the FDIC insurance limits. Or you have bought bank bonds or bank debentures. In most bank failures, you could suffer a loss in your savings or investments. Do not count on the government to cover uninsured deposits, bonds or other debts.

Thus, our recommendation is to seek to do business with Weiss Ratings recommended institutions (rated B+ or better) regardless of government guarantees. This should give you two layers of protection — (1) the financial strength of the institution on its own merits plus (2) FDIC insurance.

What might happen if my insurance company fails?

Insurance companies are regulated at the state level by the insurance department in which the individual subsidiary is based. When an insurance company gets into trouble, the state regulator steps in and takes control of it.

If the regulator believes that the company has good assets and a strong book of business, the regulator will direct it to be rehabilitated. During rehabilitation, the company is restructured. The company builds capital and cleans up its operations, with the ultimate goal of being released from rehabilitation to operate on its own.

In the case of policy modifications, i.e., lowering of guaranteed interest rates or increasing premiums, a court order would be required, and affected parties would have input.

If the company is in dire financial shape, the regulator will take it over and immediately begin liquidating its assets. The condition of the company and the reason for the regulatory takeover determine how the failed company and its policyholders will be handled.

In the case of a major company failure in which subsidiaries are located in multiple state jurisdictions, one of the states would take the lead in handling the rehabilitation in cooperation with the other state regulators.

What happens to policyholders is a case-by-case situation, but typically, insurance claims continue to be paid. If you hold a life insurance policy and you pass away, the death claim on the policy would usually be paid. If the policy has a cash value, as would be the case with a whole life or universal life policy, the outcome is less clear.

The receiver could, in that case, freeze the cash values and not release them until such time as the assets of the company are valued. At resolution, you could be made whole or receive only a portion of your cash value.

If you own a fixed annuity and you are in the payout phase, the payments would typically continue. What could potentially change is the interest rate that is credited to your initial investment. If the receiver, or a potential buyer, determines that the interest rate is too high, a court order could be issued to lower the crediting rate on that block of annuities.

If you own a variable annuity, it would be slightly different. The assets underlying your contract are separated out from the general assets of the insurance company, so there should be no question of the value of the contracts. Your payout would typically continue, and the value of your annuity would remain tied to the underlying assets.

That all said, being the policyholder of a failed insurance company can be unsettling. One can't know with certainty what will happen, although in most cases, claims continue to be paid. There are nightmare scenarios, such as the Executive Life failures in the early '90s, when policyholders' cash values were frozen for months.

How can I find a strong bank?

Step 1. There are many insurance companies with similar-sounding names. So make sure you have the complete company name along with its domicile state. So if there is any confusion, the location should clear it up.

Step 2. Become familiar with the Weiss Ratings scale:

A = excellent
B = good
C = fair
D = weak
E = very weak
+ = the upper third of each grade range
- = the lower third of each grade range

Step 3. Check to see if your insurance company is on our list of Weakest Insurance Companies in the U.S.

If your company is not on this list, it’s because it has received at least a rating of C- (fair) and possibly better. C is not a good rating. But it means that, at a minimum, we believe your insurer is stable and not currently vulnerable.
If your insurance company is on this list, it means we believe your bank is vulnerable to financial difficulties or even possible failure, based on our statistical analysis of its capital, asset quality, earnings and other factors. We recommend you seriously consider moving your business to a stronger company.

Step 4. To find a strong company in your state, go to our list of Strongest Insurance Companies in the U.S.and look up your company name alphabetically.

Suppose I cannot find a strong bank near me?

If you cannot find a strong institution, consider U.S. Treasury bills. But please do not confuse Treasury bills with Treasury bonds:

Treasury bills are short term — under one year.
Treasury bonds are long term — up to 30 years.

The primary difference: The longer the maturity, the longer you have to wait for your money. If you don’t want to wait, you can sell your bonds (or “notes,” which are between one and 10 years) on the secondary market. But if inflation or other factors have driven down their market value, you will take a loss.

Three-month — or, more precisely, 13-week — Treasury bills don’t have that problem. The most you’ll have to wait is the three months and you can also cash them in at any time in-between. Any market fluctuations are infinitesimal and simply not an issue.

How do you buy Treasury bills? You can open an account directly with the U.S. Treasury Department, using your Social Security number or your business tax ID number via the Treasury Direct program.

But the most practical way to buy Treasury bills is through a money market fund that invests exclusively in short-term U.S. Treasury securities or equivalent. The Treasuries it buys enjoy the same guarantee from the U.S. government as Treasuries bought through any other venue.

Plus, the Treasury-only money fund gives you the additional advantage of immediate availability of your money. You can have your funds wired to your local bank overnight. Or you can even write checks against it, much as you’d write checks against any bank checking account.

A Treasury-only money fund invests your money in short-term U.S. Treasury securities (plus other securities that are 100% backed by U.S. Treasuries). The fund uses a bank, but strictly as a custodian for the securities, and those accounts are completely segregated from the bank’s deposits or assets. Even if the custodian bank fails, your money invested in short-term Treasuries through the fund — and your access to that money — is not affected.

Moreover, many Treasury-only money funds provides you with check-writing privileges so that you can use the money fund as your personal or business checking account. For more information on this approach, see Some Advantages of Treasury-Only Money Market Funds.

What are your terms and conditions?

Click here to view our terms and conditions.