Premium Growth: Top 25 P/C Premium Gainers in 2007 Versus 2006

By | April 21, 2008

President Calvin Coolidge noted that “All growth depends upon activity. There is no development physically or intellectually without effort, and effort means work.” That being the situation, the following 25 companies exerted a lot of effort and work during 2007. These companies demonstrated the largest dollar increases in direct premium written for 2007 versus 2006. With apologizes to the hard-working folks at Citizens Property Insurance Corp., our Top 25 list was based upon voluntary growth.

For the period ending Dec. 31, 2007, the Top 25 property/casualty insurance companies wrote an additional $8.6 billion in direct written premium over the 2006 level. The total direct written premium for companies making the list was $64.9 billion versus $56.4 billion in the prior period. This represented an increase of more than $8.6 billion.

Our review of the reported financial position of the Top 25 indicated that each of the carriers reported sufficient surplus to support their growth. Furthermore, the insurance companies in the Top 25 were owned by, or part of, well-known and highly respected groups of insurance carriers.

Demotech Inc., the official research partner of Insurance Journal, believes that individual carriers, not groups, should be used to measure direct written premium growth. Our assumption is that individual companies should be utilized to assess changes in direct written premium. Group strategy or holding company strategy may be measured based on net writings.

This approach seems reasonable to us because multiple insurance companies within a group exist for specific and tactical reasons. These companies can pool or otherwise share written premium as they choose; however, direct writings provide the appropriate measure for the analysis of growth at the company level.

Allstate Fire and Casualty Insurance Co. lead the charge with growth of $857 million in direct written premium. Given the issues that have arisen in the subprime mortgage insurance marketplace and the real estate industry, I was somewhat surprised to see Genworth Mortgage Insurance Corp. increase its direct premium written by nearly $183 million. With nearly $750 million in direct premium written in 2007, Genworth Mortgage was No. 24 in the Top 25.

Overall, the Top 25 grew at an annual rate of approximately 15 percent. The largest percentage increase was 357 percent by IDS Property Casualty Insurance Co. (No. 6). The smallest percentage increase was State Farm Fire and Casualty Co. at about 3 percent (No. 10). With a base in 2006 of nearly $14.5 billion of premium, large percentage changes are difficult for State Farm Fire and Casualty Co. to obtain.

Demotech believes that consumers are well-served when financially stable carriers expand their writings. The carriers comprising our Top 25 companies worked hard to grow their direct premium written. Equally important, they have the capacity and reinsurance relationships to absorb and sustain the growth.

Topics Carriers Trends Property Casualty Pricing Trends Casualty

About Joseph L. Petrelli

Petrelli is the president and co-founder of Demotech, Inc., a Columbus, Ohio-based financial analysis and actuarial services firm. Visit Demotech.com for additional information. More from Joseph L. Petrelli

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