Amid the continued difficult economic conditions, a heightened frequency of catastrophic events in 2011 has resulted in nearly $40 billion of losses to insurers. The losses associated with these catastrophes have been discussed and documented and do not appear to be abating in the near future.
Despite the catastrophes and economic uncertainties that have taken their toll on underwriting profitability, over the nine months ending Sept. 30, 2011, property/casualty insurance companies in total have increased direct premium and reported an overall net income.
Underwriting Results, Overall Profitability
The effect of the increased storm activity in 2011 is evident in the underwriting results of P/C companies through Sept. 30, 2011. The P/C industry reported a $33.6 billion loss through the first nine months of 2011. Of that total, the Top 25 writers of in terms of direct premium growth accounted for approximately $4.1 billion in underwriting losses, more than 12 percent of the total.
The remainder of the more than 2,500 P/C writers accounted for more than $29.5 billion in underwriting losses through the first nine months of 2011.
There is a silver lining in these results though, as the P/C industry was able to report an overall net income of more than $10.2 billion through the first nine months of 2011. Of that total, the Top 25 writers in terms of direct premium growth accounted for more than $1.7 billion in net income, approximately 17 percent, with the remainder of P/C writers accounting for approximately $8.5 billion in net income over the nine months ending Sept. 30, 2011.
Direct Premium Growth
P/C companies comprising the Top 25 writers in terms of direct premium growth leveraged their experience and continued to exhibit an impressive display of financial stability and growth. Over the nine months ending Sept. 30, 2011, the Top 25 writers increased their direct premium written by more than 12 percent, over $7.6 billion. Consequently, the Top 25 wrote more than 18 percent of the total P/C insurance industry’s direct written premium during this time period.
In contrast, the remainder of insurers that comprise the industry did not fare as well — their nine month direct written premium increased approximately 1.8 percent, or $5.4 billion, over the first nine months of last year.
In total, direct premium written for the P/C industry grew more than $13 billion.
Good News
It was noted in the second quarter that this growth should be seen as good news and could be used to predict that 2011 will end with increased direct premium written year over year.
Direct premium written has increased period over period for each reporting period in 2011. Notably, 2007 was the last year in which a period over period increase to direct premium written was observed for each reporting period and was the last time an increase in year over year direct premium written was reported. This indicates that direct premium should increase year over year for 2011.
Despite the catastrophic events and tough economic conditions, financially stable P/C companies will weather these storms and continue to honor meritorious claims. Policyholders should be able to take comfort in this fact while recognizing the importance of the service these companies provide in protecting them from unforeseen events.
Top 25 Property/Casualty Insurers
Based Upon Dollar Amount of Direct Premium Written (DPW) Growth, Nine Months Ending Sept. 30, 2011 Versus Sept. 30, 2010
| DPW Growth Rank | Company Name | DPW 09/30/2011 | DPW 09/30/2010 | DPW $ Change | DPW % Change |
|---|---|---|---|---|---|
| 1 | Liberty Mutual Insurance Co. | 3,498,751,680 | 2,926,565,677 | 572,186,003 | 19.55% |
| 2 | NAU Country Insurance Co. | 1,335,377,667 | 811,371,444 | 524,006,223 | 64.58% |
| 3 | Rural Community Insurance Co. | 1,451,138,714 | 928,590,741 | 522,547,973 | 56.27% |
| 4 | ACE Property and Casualty Insurance Co. | 1,826,266,948 | 1,357,285,403 | 468,981,545 | 34.55% |
| 5 | Great American Insurance Co. | 1,599,833,564 | 1,206,945,280 | 392,888,284 | 32.55% |
| 6 | AIU Insurance Co. | 2,469,705,995 | 2,086,252,648 | 383,453,347 | 18.38% |
| 7 | Allstate Fire and Casualty Insurance Co. | 3,012,904,317 | 2,636,697,043 | 376,207,274 | 14.27% |
| 8 | GEICO General Insurance Co. | 4,708,583,100 | 4,340,505,893 | 368,077,207 | 8.48% |
| 9 | State Farm Mutual Automobile Insurance Co. | 23,036,281,196 | 22,677,229,040 | 359,052,156 | 1.58% |
| 10 | National Union Fire Insurance Co. of Pittsburgh, PA | 6,065,273,313 | 5,747,507,130 | 317,766,183 | 5.53% |
| 11 | Travelers Home and Marine Insurance Co. | 2,070,719,382 | 1,760,616,100 | 310,103,282 | 17.61% |
| 12 | American Agri-Business Insurance Co. | 831,806,622 | 540,835,184 | 290,971,438 | 53.80% |
| 13 | Starr Indemnity & Liability Co. | 601,234,057 | 326,922,483 | 274,311,574 | 83.91% |
| 14 | GEICO Indemnity Co. | 3,117,418,506 | 2,862,652,294 | 254,766,212 | 8.90% |
| 15 | Producers Agriculture Insurance Co. | 634,102,900 | 389,026,815 | 245,076,085 | 63.00% |
| 16 | Farmers Mutual Hail Insurance Co. of IA | 676,937,988 | 438,209,916 | 238,728,072 | 54.48% |
| 17 | Commerce and Industry Insurance Co. | 902,655,306 | 676,452,097 | 226,203,209 | 33.44% |
| 18 | Fireman’s Fund Insurance Co. | 1,745,678,107 | 1,521,069,856 | 224,608,251 | 14.77% |
| 19 | Travelers Property Casualty Co. of America | 2,961,376,643 | 2,751,402,363 | 209,974,280 | 7.63% |
| 20 | Occidental Fire and Casualty Co. of NC | 336,533,473 | 134,301,865 | 202,231,608 | 150.58% |
| 21 | 21st Century Centennial Insurance Co. | 442,465,968 | 257,537,951 | 184,928,017 | 71.81% |
| 22 | Continental Casualty Co. | 3,179,142,292 | 2,995,739,090 | 183,403,202 | 6.12% |
| 23 | Garrison Property and Casualty Insurance Co. | 551,866,267 | 372,134,954 | 179,731,313 | 48.30% |
| 24 | Agri General Insurance Co. | 460,409,665 | 291,075,629 | 169,334,036 | 58.18% |
| 25 | Stonington Insurance Co. | 489,750,466 | 325,806,795 | 163,943,671 | 50.32% |
| Top 25 by DPW Growth | 68,006,214,136 | 60,362,733,691 | 7,643,480,445 | 12.66% | |
| All others | 308,052,669,465 | 302,639,521,948 | 5,413,147,517 | 1.79% | |
| Total | 376,058,883,601 | 363,002,255,639 | 13,056,627,962 | 3.60% |
Data Source: The National Association of Insurance Commissioners, Kansas City, Mo., by permission. Information derived from SNL. The NAIC and SNL do not endorse any analysis or conclusion based on the use of its data.
Topics Trends Catastrophe Carriers Profit Loss Pricing Trends Agribusiness Property Market Property Casualty Casualty
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