Vita Sackville (1892-1962) was a British novelist and poet. In 1928, she wrote, “Growth is exciting; growth is dynamic and alarming.” Eighty years later, her description of growth is more accurate than ever. With the insurance industry in a particularly soft market, the Top 25 insurers likely view growth as exciting, dynamic and alarming.
The list below shows the 25 corporate insurers reporting the largest dollar increases in direct premium written (DPW) for the 12-months ending June 30, 2008, versus the 12-months ending June 30, 2007. Citizens Property Insurance Corp. is not included as we based our Top 25 list on voluntary growth.
For the 12-month period ending June 30, 2008, the Top 25 property/casualty insurance companies wrote an additional $9.4 billion in DPW over the respective 2007 level. The total DPW for listed companies was $54.3 billion versus $44.9 billion in the prior period. Information on the Top 25 is set forth in the chart below.
Our review of the reported financial position of the Top 25 indicated each of the carriers reported sufficient surplus to support its growth. Furthermore, the insurance companies in the Top 25 were owned by, part of, or otherwise associated with well-known groups of insurance carriers. National Union Fire Insurance Co. of Pittsburgh, Pa., a member of the AIG Group, captured first place the list.
For the third consecutive Top 25 list, Allstate Fire and Casualty Insurance Co. ranked first or second on the list. Allstate’s DPW in the 12-months ending June 30, 2008, was two-thirds more than the 12-months ending June 30, 2007. Despite turmoil in the subprime mortgage marketplace, real estate industry, and general economic conditions, Mortgage Guaranty Insurance Corp. reported a $272 million increase over its prior 12-month period. With growth of $272 million in DPW for the 12-month period, Mortgage Guaranty was No. 17 on the Top 25.
Overall, the Top 25 grew at an annual rate of 21 percent. The largest percentage increase was 305 percent by Assured Guaranty Corp. (No. 11). The smallest percentage increase was State Farm Fire and Casualty Co. with 2 percent (No. 15). With a base of nearly $15 billion, large percentage changes are difficult to achieve. Westport Insurance Corp. had the 25th largest dollar increase in DPW and recorded nearly 90 percent growth over the prior 12-month period.
Demotech Inc. believes individual carriers, not groups, should be used to measure DPW growth. Our assumption is that individual companies should be utilized to assess changes in DPW. Group strategy or holding company strategy may be measured based on net writings. This principle seems reasonable because multiple insurance companies within a group exist for tactical reasons. Companies within a group pool or otherwise share written premium as they choose; therefore, only direct writings provide a measure for growth at the company level.
The Top 25 grew their DPW by more than $9 billion. As premiums are earned and losses are paid or reserved, only time, and a review of Schedule P loss reserve runoff, will tell if the growth was exciting, dynamic or alarming. Fortunately, the Top 25 have the capacity to sustain their premium growth. Demotech believes consumers will continue to be well served as financially stable carriers grow their top lines.
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