State Farm the biggest loser at $7 Billion on Personal Auto alone. Led to closing 11 offices and laying off or displacing 4,200 employees. The Good Neighbor is having its problems.
Eddie, Correct. The good neighbor people have flawed underwriting and they have been writing too many cell addicts and dope heads at depressed pricing. Some of their captives may get cut off at the knees for placing substandard business on the books.
The results are somewhat expected. Premiums grew by about 3%, and property cat losses drove the decrease in net income.
The cat losses aren’t far from the average amount posted in the article, which means the rise is simple statistical variance…
Investment income was stable, but the volume of business grew in areas of exposure that suggest the economy is growing, and with that, exposures mentioned are growing, thus premiums are up over 2015. How much of the 2016 premium (written) growth is due to economic expansion isn’t discernible from the stats presented.
If anyone is surprised by the year-to-year volatility of the combined ratios and the net income in a single QUARTER, they haven’t been working in the P&C industry very long.
What will be interesting to review are results by company, with highlighting of SF and AIG vs. the rest of the P&C industry. Perhaps the results of some other companies undergoing ‘changes’ in 2016 would provide a report card on their success?; e.g. Chubb growing in size, efficiently or inefficiently? Metlife Auto & HO showing financial stability in the shadow of their legal wrangle over ‘TBTF’ status with the Feds? Stay tuned for more detailed stats and a PolarBeaReview of such stats.
Oops! I forgot to ask ‘why weren’t legacy losses amounts in CY 2016 mentioned?’ The article refers to them as a drag (para-bear-phrashing) on 2016 results, but doesn’t state the amounts of A&E, etc. Bear culpa and IJ article author culpa, too!
More likely, it will be in rate increases. State Farm is the biggest (Bear)in the room, excuse me Polar. They expect they can set the rate and all the little bears will follow.
Yes, Agent, SF can try to alter the inertia in market rates. Whether or not it does will laregly be determined by the amount of ‘hurt’ experienced by the other players in 2016. AIG does more commercial than personal, Liberty is probably closer to 50/50, but I haven’t looked at their book recently, and MetLife is probably more concerned with taking on the longer tail lines due to the TBTF debate their having with Uncle Sam. So, who knows if SF will turn the PPA market? Certainly not me; I’m just a bit smarter than the avg polar bear.
State Farm the biggest loser at $7 Billion on Personal Auto alone. Led to closing 11 offices and laying off or displacing 4,200 employees. The Good Neighbor is having its problems.
SF deserves what they are getting. There are certain principles of underwriting you must adhere to or you will lose money.
Eddie, Correct. The good neighbor people have flawed underwriting and they have been writing too many cell addicts and dope heads at depressed pricing. Some of their captives may get cut off at the knees for placing substandard business on the books.
The results are somewhat expected. Premiums grew by about 3%, and property cat losses drove the decrease in net income.
The cat losses aren’t far from the average amount posted in the article, which means the rise is simple statistical variance…
Investment income was stable, but the volume of business grew in areas of exposure that suggest the economy is growing, and with that, exposures mentioned are growing, thus premiums are up over 2015. How much of the 2016 premium (written) growth is due to economic expansion isn’t discernible from the stats presented.
If anyone is surprised by the year-to-year volatility of the combined ratios and the net income in a single QUARTER, they haven’t been working in the P&C industry very long.
What will be interesting to review are results by company, with highlighting of SF and AIG vs. the rest of the P&C industry. Perhaps the results of some other companies undergoing ‘changes’ in 2016 would provide a report card on their success?; e.g. Chubb growing in size, efficiently or inefficiently? Metlife Auto & HO showing financial stability in the shadow of their legal wrangle over ‘TBTF’ status with the Feds? Stay tuned for more detailed stats and a PolarBeaReview of such stats.
Oops! I forgot to ask ‘why weren’t legacy losses amounts in CY 2016 mentioned?’ The article refers to them as a drag (para-bear-phrashing) on 2016 results, but doesn’t state the amounts of A&E, etc. Bear culpa and IJ article author culpa, too!
Here comes the “Time to cut commissions” line from carriers.
Not necessarily. Not from the wiser ones.
More likely, it will be in rate increases. State Farm is the biggest (Bear)in the room, excuse me Polar. They expect they can set the rate and all the little bears will follow.
Yes, Agent, SF can try to alter the inertia in market rates. Whether or not it does will laregly be determined by the amount of ‘hurt’ experienced by the other players in 2016. AIG does more commercial than personal, Liberty is probably closer to 50/50, but I haven’t looked at their book recently, and MetLife is probably more concerned with taking on the longer tail lines due to the TBTF debate their having with Uncle Sam. So, who knows if SF will turn the PPA market? Certainly not me; I’m just a bit smarter than the avg polar bear.
‘they’re’, not ‘their’. bear culpa.