Despite a hurricane-ravaged third quarter, property/casualty insurers reported profits of $28.1 billion in the first nine months of 2004, representing a 22.4 percent increase over the $22.9 billion earned during the same period in 2003, according to Weiss Ratings Inc., an independent provider of ratings and analyses of financial services companies, mutual funds and stocks.
Insurers reporting the largest year-over-year increases in net income include: Continental Casualty in Chicago, Ill.; State Farm Mutual in Bloomington, Ill.; State Farm Fire & Casualty in Bloomington, Ill.; Allstate Insurance Co. in Northbrook, Ill.; and Continental Insurance Co. in Concord, N.H.
Meanwhile, insurers reporting the largest year-over-year decreases in net income include: State Farm Florida in Bloomington, Ill.; Allstate Floridian Insurance Co. in St. Petersburg, Fla.; Converium Reinsurance in Stamford, Conn.; US Fidelity & Guaranty Co. in St. Paul, Minn.; and Nationwide Indemnity in Columbus, Ohio.
Despite a Decline, Underwriting Profits Continue to Surpass 2003 Figures
The industry’s impressive earnings reflect continued underwriting strength as insurers reported a $3.7 billion underwriting gain in the first three quarters of 2004, representing a 190.3 percent increase over the $4.0 billion underwriting loss reported during the same period in 2003. However, in reviewing the industry’s underwriting performance, Weiss found that property/casualty insurers actually experienced a 60.3 percent decrease in net underwriting gain compared to the first two quarters of 2004, in which insurers reported a $9.2 billion profit.
“The reduced underwriting profit in the third quarter reflects the impact of four major hurricanes, although the long-term consequences appear to be negligible due to the industry’s overwhelmingly strong financial position,” commented Melissa Gannon, vice president of Weiss Ratings Inc. “Historically, the industry has operated at an underwriting loss, so the fact that insurers reported a profit during a claims intensive quarter is evidence of the industry’s renewed strength.”
Property and casualty insurers reporting the largest underwriting losses in the first three quarters of 2004 were: State Farm Florida Insurance Co. in Bloomington, Ill.; Allstate Floridian Insurance Co. in St. Petersburg, Fla.; US Fidelity & Guaranty Co. in St. Paul, Minn.; St. Paul Fire & Marine Insurance Co. in St. Paul, Minn.; Nationwide Indemnity Co. in Columbus, Ohio.
Notable Upgrades and Downgrades
Among the 2,239 property/casualty insurers reviewed by Weiss, three companies were upgraded, while 28 were downgraded. Notable upgrades include:
— Erie Insurance Exchange (Erie, Penn.) from B- to B
— Lexington National Ins. Co. (Baltimore, Md.) from D+ to C
— Camico Mutual Ins. Co. (Redwood City, Calif.) from C+ to B-
Notable downgrades include:
— Progressive Casualty (Mayfield Village, Ohio) from B to C+
— State Farm Floridian (Bloomington, Ill.) from B- to C
— Nationwide Indemnity (Columbus, Ohio) from B- to C
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