E&S Direct Premiums Written Fall 7.5% From Prior Year

May 4, 2010

Excess and surplus insurers endured another year of declining premiums in 2009, writing 7.5 percent fewer direct premiums versus the prior year, according to SNL Financial’s analysis of the U.S. E&S market. The slide comes after significant declines in 2008, when premiums were down 8.6 percent from 2007.

All of the top 10 E&S insurers by market share saw year-over-year declines in premiums written. American International Group Inc. wrote 15.1 percent fewer premiums in 2009, but retained its No. 1 position with nearly a quarter of the market share. Rounding out the top three, Zurich Financial Services Ltd. saw an 11.2 percent decline, and Nationwide Mutual Group saw a decline of 4.6 percent.

Although the majority of the top E&S insurers wrote fewer premiums in 2009, Ironshore Inc. boosted its underwriting, up 623 percent in 2009 compared to 2008, moving the company to No. 20 from No. 65. QBE Insurance Group Ltd. also gained traction in the 2009 rankings, moving to No. 11 from No. 40 year-over-year after increasing its premiums 249 percent.

“The gap between standard and specialty markets for declines in commercial lines direct premiums narrowed to 2 percent in 2009, down from 5 percent in 2008, suggesting that competition in standard lines is catching up to specialty, and the market is getting closer to a bottom,” said Jon Wright, Director of Insurance at SNL.

SNL, a provider of financial information on more than 3,300 public companies and 50,000 private companies in the banking, financial services, insurance, real estate, energy, and media and communications sectors, ranked the insurers by their 2009 E&S direct premiums written. SNL defined excess and surplus premiums as premiums written in a state where the company was not licensed to write business. The rankings are limited to companies that file NAIC statements. SNL calculated group totals by adding the individual entities’ premiums. U.S. totals exclude premiums written by Lloyd’s of London, which transacts its U.S. E&S business through licensed surplus lines brokers.

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