Top 25 Insurance Companies

Below you'll find a list of the largest U.S. property and casualty insurers as measured by net premiums written and reported by A.M. Best.

Ranking	Insurance Company	Net Premiums Written
1	State Farm Group	$50,808,635
2	Allstate Insurance Group	$24,796,256
3	Liberty Mutual Insurance Cos.	$21,483,996
4	Berkshire Hathaway Insurance (includes Geico)	$21,358316
5	Travelers Group	$20,594,458
6	American International Group	$19,687,720
7	Nationwide Group	$14,489,531
8	Progressive Insurance Group	$14,476,676
9	Farmers Insurance Group	$14,129,512
10	USAA Group	$10,679,414
11	Hartford Insurance Group	$9,688,760
12	Chubb Group of Insurance Cos.	$8,927,736
13	CNA Insurance Cos.	$6,188,618
14	American Familiy Insurance Group	$5,324, 290
15	Aliianz of America	$4,666,301
16	Auto-Owners Insurance Group	$4,485,442
17	Munich-American Holding Corp.	$4,413,834
18	Zurich Finanical Services NA Group	$4,400,123
19	Erie Insurance Group	$4,019,273
20	Ace INA Group	$3,705,475
21	Transatlantic Holdings Inc. Group	$3,408,020
22	W.R. Berkley Group	$3,392,330
23	The Hanover Insurance Group Property & Casualty Cos.	$3,053,508
24	MetLife Auto and Home Group	$2,983,236
25	Cincinnati Insurance Cos.	$2,965,462

Commercial Real Estate Credit Crunch

Good morning, Madam Chair, Ranking Member Diaz-Balart, and Members of the Subcommittee.  My name is Chip Morris and I am the Assistant Commissioner for the Office of Real Estate Acquisition in the Public Building Service (PBS) at the US General Services Administration (GSA).  Thank you for inviting me here today to discuss the impact of the serious commercial real estate credit crunch and GSA leasing and building during an economic crisis.  My colleague, Bart Bush, Regional Commissioner for PBS in the National Capital Region (NCR) is also here to answer questions about NCR’s real estate acquisition reorganization.

Since our new construction, modernization, and repair and alteration programs are funded through appropriations, they are not directly affected by any decreases in the availability of credit generally.  GSA pays contractors and subcontractors for these projects periodically for work completed; they typically do not need to obtain third-party financing to complete these segments. 

The credit crunch has had mixed impacts on our leasing program.  Financing for government leasing deals (where leases are backed by the full faith and credit of the United States) has always been lower than that for more risky ventures.  Therefore, when credit becomes more expensive or difficult to obtain, lessors of government-leased buildings have typically obtained financing more easily and on less costly terms than other borrowers.  Moreover, in some markets lease rates have declined. 

However, GSA is noticing an adverse impact of the credit crunch on its leasing program in certain instances.  We monitor the impact of the credit crunch on lease projects on an ongoing basis.  Most recently in February 2009, we asked our regional offices to identify leasing projects where lessors were experiencing difficulty obtaining financing.  The regional responses identified 21 lease projects that they believe were impacted by a lessor’s inability to secure funding resulting in delayed delivery of space or a need to recompete the procurement. 

The credit crunch impacts some projects and agencies to a greater degree than others; however, we have seen some impact on small, short-term leases as well as large lease construction projects.  Several lessors have experienced difficulty obtaining financing for the tenant improvements.  Others have withdrawn from procurements due to their inability to obtain financing.  In some cases lease contracts have been terminated because of the lessor’s inability to close on financing generally.  These delays can add cost to the overall project and impact our client agencies’ ability to fulfill their mission.

On larger, more complex projects, we can use our credit tenant lease in order to attract more favorable financing.  We are also working on improving our solicitations for offers to obtain more disclosures in the bids regarding financing terms from both lenders and offerors to protect the government and assure ourselves of the financial viability of the prospective offers.

That concludes my testimony and I would be happy to try to answer any questions that you may have.

SBA Real Estate Loan

Helping small businesses become even more successful.

The Small Business Administration (SBA) has three loan programs for the purchase, refinance or construction of commercial real estate.

	7(a) Real Estate	504 Loan Program	7(a) Pari Passu
Use of Funds	Owner-occupied commercial real estate purchase, refinance or construction	To purchase or construct owner-occupied commercial real estate	Owner-occupied commercial real estate purchase, refinance or construction
Industries	Most industries qualify; no nonprofits	Most industries qualify; no nonprofits	Most industries qualify; no nonprofits
Loan Types	Term loans	Term loans	Term loans
Loan Amount	Up to $5 million	Up to $11.25 million for most industries; higher for qualified manufacturing firms	Up to $7 million; First loan: Up to $5 million SBA guaranteed; Second loan: Up to $2 million U.S. Bank direct
Interest Rate	Based on LIBOR and WSJ Prime	Based on LIBOR and WSJ Prime	Based on LIBOR and WSJ Prime
Term	Up to 25 years	Lender loan (real estate): Typically 25 years; CDC Loan: Typically 20 years; Equipment loan: 10 years	Up to 25 years
Amortization	Fully amortized; no balloon payments	Typically 25 years on first position; 20 years on the long-term (CDC) portion	Fully amortized; no balloon payments
Prepayment Penalty	5% – first year 3% – second year 1% – third year	Prepayment applies	5% – first year 3% – second year 1% – third year (For second loan, prepayment applies)
Collateral	Subject to property; additional collateral may be required	U.S. Bank loan: First mortgage on property being financed; CDC loan: second mortgage on business real estate	Subject to property; additional collateral may be required
LTV/Advance Rates	LTV up to 90%	LTV up to 90%	LTV up to 90%

Commercial Real Estate: Owner-Occupied Loan Optio

It’s easy to make owning a reality.

The rewards of owning commercial real estate can be significant. We’ll work with you to determine if buying commercial property is the right decision for your business and provide the best financing solution for your needs, be it a conventional loan or one backed by the Small Business Administration (SBA).

Real estate loans up to $5 million for purchase, refinance or improvement.

If you’re ready to stop paying rent on your company’s building, we offer a variety of loans for the purchase, refinance and improvement of owner-occupied commercial property.

• Loan amounts from $100,000 to $5 million
• Up to 80% loan-to-value
• Terms of 5, 10 and 15 years and amortization up to 25 years
• Variable or fixed rates
• Payments include principal and interest

SBA loans: Ideal for businesses that need flexible financing.

SBA loans are backed by the federal government and made available through lending partners like U.S. Bank. They’re designed for borrowers that may not meet the needs of conventional financing due to insufficient collateral, a low down payment or other credit factors.

Commercial Real Estate: Investment Property Loans

The financing and support you need to succeed.

Purchasing commercial real estate is a significant step for any small business. We have both the expertise and financing solutions you need to purchase virtually any type of commercial property, including office buildings, shopping malls, mixed-use buildings and multi-family dwellings.

Loans for apartment buildings and multi-tenanted office, industrial and retail properties.

Investment property real estate loans are for the purchase or refinance of non-owner occupied commercial real estate, including multi-tenanted office buildings, shopping centers, mixed-use commercial buildings, multi-family dwellings and more.

• Loan amounts from $100,000 to $2 million
• Up to 80% loan-to-value for multi-family dwellings
• Terms of 5, 10 and 15 years and up to 25 years amortization
• Variable or fixed rates

Owner-occupied Mortgages

Loans That Meet Your Objectives

Our highly experienced real estate staff will work with you to structure a loan that meets your objectives of acquiring, building, or refinancing commercial properties. We approve loans regionally. 

Types of financing include: permanent, bridge, construction, Small Business Administration (SBA), industrial/tax-exempt revenue bonds, and secured lines of credit. 

Owner-occupant Term Loan Guidelines

• 10-year to 25-year terms with up to 25-year amortization
• Up to 75 percent loan-to-value ratio
• Fixed-rate loans or LIBOR-based adjustable-rate loans
• Flexible prepayment options

Refinance into a 15-year mortgage and save

Refinancing into a 15-year mortgage is a common way of taking advantage of today's low interest rates.

Latest rates on mortgages
30-year fixed mortgage	4.24%
15-year fixed mortgage	3.19%

With the interest rate differential between a 30-year fixed mortgage and a 15-year fixed mortgage hovering at around 1 percentage point, borrowers continue to find this an attractive refinancing option.

Check 15-year mortgage rates offered in your area.

Mike Henry, senior vice president for residential lending with Dollar Bank in Pittsburgh, notes, "When we get into times of high volumes of refinancing, like we've had for the last two to three years, 15-year is more than half of what is refinanced. A lot of that is people in 30-year loans refinancing to 15. There are a lot of benefits going from a 30 to a 15."

15-year loans cost less interest over time

One benefit is that by switching to a lower mortgage rate and term, you would save on the interest payments you make for the duration of the mortgage.

Henry cites the example of a borrower with a $200,000 30-year mortgage at 5 percent and a monthly payment of $1,074. By refinancing into a 15-year mortgage after five years with the 30-year mortgage, she would end up paying about $1,288 a month, but would end up saving around $90,000 in interest payments.

Scenario 1: 30-year loan, no refinance Pat gets a $200,000 mortgage at 5 percent and pays it off in 30 years:
	30-year fixed
Interest rate	5%
Loan amount	$200,000
Monthly payment	$1,074
Total interest paid	$186,512

Scenario 2: Refinance to 15-year loan Alex gets a $200,000 mortgage at 5 percent. Five years later, Alex refinances the outstanding balance of $183,349 into a 15-year mortgage at 3.5 percent:
First 5 years: 30-year fixed
Interest rate	5%
Loan amount	$200,000
Monthly principal and interest	$1,074
Interest paid in 5 years	$48,841
Next 15 years: 15-year fixed
Interest rate	3.25%
Loan amount	$183,349
Monthly principal and interest	$1,288
Interest paid in 15 years	$48,552
Total interest paid in both loans	$97,393

15-year lets you pay off loan faster

You pay off a loan faster with a 15-year mortgage because the term is shorter, so you end up free of mortgage debt faster.

Bruce Luecke, vice president of product development for Nationwide Bank in Columbus, Ohio, says, "This might be skewed towards people who have more disposable income and want to pay off their loan faster. Certainly, the opportunity is to free themselves faster from housing debt, if that's what makes sense for them personally."

FEATURED RATES

You could decide instead to keep the 30-year loan and continue with a lower monthly payment and invest the money in hopes of a higher return.

15-year loans charge fewer fees

Another benefit is that you could pay lower fees to get a 15-year mortgage.

Fannie Mae and Freddie Mac charge fees, called loan-level price adjustments, that vary according to credit score and loan-to-value. The fees are " applicable for all mortgages with terms greater than 15 years" -- so they don't apply to mortgages of 15 years or shorter.

For borrowers who are comfortable with the higher 15-year payment, and who would have to pay these fees on a 30-year loan, "the 15-year is a nice option," says Bob Walters, chief economist for Quicken Loans in Detroit.

But 15-year loans have higher payments

The downside to refinancing into a 15-year mortgage is the higher monthly payments.

Comparison: $275,000 mortgage, 30-year vs. 15-year
Term	30 years	15 years
Interest rate	4.25%	3.5%
Monthly principal and interest	$1,353
Total interest paid	$212,020	$78,867

Some borrowers might prefer to keep a 30-year mortgage and make higher payments whenever they feel comfortable doing so, in a bid to pay off the loan faster without tying themselves down to a required higher payment. This approach is more common when the rate differential between the 15-year and the 30-year mortgage is low.

Try Bankrate's calculator to help you decide between a 15-year or 30-year mortgage.

While the refinancing discussion typically centers on refinancing into a 15-year fixed mortgage, how about refinancing into an adjustable-rate mortgage that could be described as a 15-year hybrid ARM?

Pentagon Federal Credit Union in Alexandria, Virginia, offers an ARM with a fixed rate for the first 15 years. It adjusts once after that, keeping the adjusted rate for the next 15 years. The rate increase is capped at the initial rate plus 6 percent.

The initial interest rate is between the rates on 15-year and 30-year fixed-rate mortgages.

Henry calls it an interesting product that benefits from having a lower interest rate, although it is amortized over 30 years, so the loan isn't paid off faster. It's an option for borrowers who plan to sell their homes within 15 years.