The original criteria and objective definition for Super Regional P/C Insurers™ were established in the Feb. 12, 2007 issue of Insurance Journal. Prior to the establishment of an industry-wide definition, a number of property/casualty insurers had referred to themselves as Super Regionals. Demotech Inc., the official research partner of Insurance Journal, has been called on to examine the criteria, make changes to the composition of that criteria and update the list of Super Regionals.
To continue the discussion on the subject of what constitutes a Super Regional and to give definition to this important group of insurers, Demotech, an actuarial services firm based in Columbus, Ohio, analyzed year-end 2008 data. This data was utilized to classify and stratify those insurers reporting data to the National Association of Insurance Commissioners (NAIC).
Company Classification System
The experts at Demotech have refined their classification system for property/casualty insurance companies. The Demotech Company Classification System categorizes all property/casualty insurers into one of 11 categories based on an analysis of data reported by the companies to the NAIC.
The 11 categories that comprise the system are: Nationals, Near Nationals, Super Regionals, Regionals, State Specialists, Coverage Specialists, Strategic Subsidiaries, Risk Retention Groups, Surplus Lines Carriers, Reinsurers and companies with less than $1 million in direct written premium.
A company cannot be assigned to more than one category. Therefore, a company not designated as a Super Regional is given another classification, perhaps Near National, Regional, or State Specialist.
Super Regional Criteria and Thresholds
To select the companies for the Super Regional Property/Casualty Insurer™ list, Demotech used these specific, objective qualifying criteria and thresholds:
- Active, individual companies not under regulatory supervision at Dec. 31, 2008;
- Reporting data to the NAIC using the property/casualty annual statement format;
- At least $1 million of direct written premium in each of two to 34 states at Dec. 31, 2008;
- Less than 90 percent of Dec. 31, 2008, direct written premium in any one state;
- Less than 90 percent of Dec. 31, 2008 direct written premium in any one line of business;
- Policyholders surplus of at least $100 million at Dec. 31, 2008;
- Net written premium of at least $50 million at Dec. 31, 2008;
- Direct written premium of at least $25 million at Dec. 31, 2008.
In general, a Super Regional Property/Casualty Insurer™ is an individual company writing multiple lines of insurance in multiple states. Risk retention groups, surplus lines insurers and reinsurers are not eligible for the Super Regional category.
The 2009 Super Regional Property/Casualty Insurers™
Utilizing these quantitative criteria, Demotech identified 149 Super Regional Property/Casualty Insurers™ for 2009, based upon year-end 2008 annual statement data. They are presented in this exclusive Insurance Journal Special Report both alphabetically and by size as ranked by direct premiums written as of Dec. 31, 2008.
Also included in this special report are the 14 companies that are new to the Super Regional list, as well as 17 insurers that are no longer classified as Super Regionals, but have been reclassified into another one of Demotech’s categories based on year-end 2008 information.
“Super Regional insurers are critically important to the insurance industry and to their agents, producers and insureds,” said Joseph Petrelli, president, Demotech. “These companies are strong, stable markets that have been working hard for their agents and insureds. This is why Insurance Journal initially expressed interest in quantifying and identifying what criteria can be used to define an insurer as a Super Regional.”
Insurance Journal and Demotech want this year’s report to continue the discussion on the role of Super Regionals, as well as the definition and criteria used in determining the classification, so that future reports can continue to refine an industry definition of Super Regional Property/Casualty Insurers™.
“Insurers and interested readers are encouraged to examine the selection criteria and thresholds used to determine the list of 2009 Super Regionals. Our selection criteria are quantitative and transparent. We remain committed to setting benchmarks at levels that accurately categorize the industry,” said Barry J Koestler II, CFA, senior financial analyst and chief ratings officer, Demotech.
The authors stress that this is an objective stratification of the companies that comprise the industry, not ratings of the individual insurers. Inclusion on the list of Super Regionals is not meant to suggest that a company is superior to companies not categorized as Super Regionals.
Future issues of Insurance Journal will report on State Specialists, Coverage Specialists, Regionals and other classifications created and defined by Demotech.
Since 1985, Demotech Inc. has been providing independent Financial Stability Ratings® of property/casualty insurers and title insurance underwriters. Its services also include statements of actuarial opinion and pricing assistance. For more information, visit www.demotech.com.
Please send suggestions, comments and criticisms to Joseph Petrelli at e-mail: jpetrelli@demotech.com, or Andrew Simpson, vice president of editorial for Insurance Journal at e-mail: asimpson@insurancejournal.com.
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