P/C Direct Premium Written Up 4.1 Percent

By | June 2, 2014

Direct premium written (DPW) for property/casualty insurance companies continues to increase. At year-end 2012, more than $523 billion of DPW was reported, which was an all-time high for the industry. For 2013, total DPW for all P/C insurers aggregately increased 4.1 percent over 2012, an increase of more than $21.5 billion. Nearly 58 percent of this premium growth is attributed to the Top 25 P/C insurers in terms of growth.

Overall, P/C insurance companies have continued to serve their clients by responding to catastrophic events, difficult economic conditions and regulatory uncertainty. For the 12 months ending Dec. 31, 2013, P/C companies comprising the Top 25 leveraged their experience and increased their DPW nearly 12.6 percent over 2012. This continues the Top 25 insurers’ impressive display of premium growth and financial stability. In contrast, the remainder of the industry reported an increase in DPW of only 2.2 percent, or $9.1 billion, year over year.

Moreover, while increasing DPW, P/C companies have aggregately maintained a sufficient level of policyholders’ surplus (PHS). One measure that determines if P/C companies are conservatively leveraged is the DPW to PHS ratio. An insurer’s DPW to PHS ratio is indicative of its leverage on a direct basis, without consideration for the effect of reinsurance. Since 2010, this ratio for P/C companies has remained conservative and stable at approximately 70 percent.

As stated in previous articles, although the market continues to exhibit signs of firming and DPW continues to increase, P/C insurers should not expect a traditional hard market in the near future. After reviewing those varying results, it is more realistic that expectations should relate to gradual, stable growth. If the industry continues to hold to its 10-year historical pattern, growth in 2014 would again lead to the highest level of year-end DPW ever reported by the P/C industry.

Top 25 Property/Casualty Companies

Based Upon Dollar Amount of Direct Premium Written (DPW) Growth
Year-End Results as of Dec. 31, 2013 Versus Dec. 31, 2012

Company Name DPW 12/31/2013 DPW 12/31/2012 $ Growth % Growth
State Farm Mutual Automobile Insurance Co. 32,236,152,562 30,935,399,277 1,300,753,285 4.20%
State Farm Fire and Casualty Co. 17,971,068,027 17,021,682,666 949,385,361 5.58%
Rural Community Insurance Co. 2,530,898,816 1,740,138,904 790,759,912 45.44%
GEICO Casualty Co. 2,150,763,913 1,363,632,265 787,131,648 57.72%
Allstate Fire and Casualty Insurance Co. 5,264,962,684 4,605,761,469 659,201,215 14.31%
LM General Insurance Co. 1,399,800,010 760,283,461 639,516,549 84.12%
Liberty Insurance Underwriters Inc. 1,025,509,870 435,126,112 590,383,758 135.68%
Zurich American Insurance Co. 5,351,181,841 4,801,761,856 549,419,985 11.44%
USAA General Indemnity Co. 1,818,233,213 1,352,089,544 466,143,669 34.48%
Continental Casualty Co. 5,413,154,389 4,970,066,475 443,087,914 8.92%
Standard Guaranty Insurance Co. 596,785,539 170,691,928 426,093,611 249.63%
Allstate Vehicle and Property Insurance Co. 477,635,319 84,065,064 393,570,255 468.17%
GEICO General Insurance Co. 6,994,505,522 6,602,148,803 392,356,719 5.94%
Tokio Marine America Insurance Co. 386,036,085 43,752 385,992,333
GuideOne Mutual Insurance Co. 698,937,422 320,788,541 378,148,881 117.88%
Wesco Insurance Co. 965,218,360 609,392,169 355,826,191 58.39%
United Services Automobile Association 6,712,310,392 6,371,408,435 340,901,957 5.35%
Starr Indemnity & Liability Co. 1,372,452,343 1,032,595,665 339,856,678 32.91%
State Insurance Fund Workers’ Compensation Fund 2,283,286,622 1,943,837,922 339,448,700 17.46%
Ohio Security Insurance Co. 537,882,843 200,213,737 337,669,106 168.65%
Atlantic Specialty Insurance Co. 868,350,353 537,006,205 331,344,148 61.70%
USAA Casualty Insurance Co. 4,610,619,666 4,290,784,176 319,835,490 7.45%
Safeco Insurance Co. of Illinois 1,743,174,908 1,425,588,362 317,586,546 22.28%
Cincinnati Insurance Co. 3,297,205,566 2,993,431,243 303,774,323 10.15%
Travelers Property Casualty Co. of America 4,561,624,379 4,258,249,635 303,374,744 7.12%

Top 25 P/C Companies by DPW Growth 111,267,750,644 98,826,187,666 12,441,562,978 12.59%
All Other P/C Companies 433,307,922,863 424,195,781,227 9,112,141,636 2.15%
Total 544,575,673,507 523,021,968,893 21,553,704,614 4.12%

Data Source: The National Association of Insurance Commissioners, Kansas City, Mo., by permission. Information derived from an SNL product. The NAIC and SNL do not endorse any analysis or conclusion based upon the use of its data.

About Douglas A. Powell

Powell is a senior financial analyst with Demotech Inc., a Columbus, Ohio-based financial analysis firm. Web site: www.demotech.com. More from Douglas A. Powell

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