A number of insurers have begun to release their financial results for Q1 2011. The following is a compilation of their announcements:
American International Group Inc. (AIG) reported net income attributable to AIG of $269 million and after-tax operating income of $2.0 billion for the quarter ended March 31, 2011, compared to net income of $1.8 billion and after-tax operating income of $637 million for the first quarter of 2010.
The diluted loss per share was $0.35 for the first quarter of 2011, compared with earnings per share of $2.66 for the first quarter of 2010. The 2011 first quarter after-tax operating income per share of $1.30 compared with after-tax operating income per share of $0.95 for the first quarter last year.
Included in the first-quarter 2011 operating results were noteworthy developments, including $1.7 billion of pre-tax catastrophe (CAT) losses related to the Japan earthquake and tsunami, the New Zealand earthquake, and Australian floods; mostly offset by a $1.1 billion valuation gain on AIA Group Limited securities and a $744 million increase in the fair value of AIG’s interest in Maiden Lane III. In addition, the run-off operations of the Capital Markets portfolios earned $277 million pre-tax in the quarter compared to a loss of $86 million a year ago, primarily due to higher unrealized market valuation gains related to the super senior multi-sector credit default swap runoff portfolio.
Additionally, the first-quarter 2011 net income included a final pre-tax charge of $3.3 billion ($2.4 billion after-tax) related to a loss on extinguishment of debt, which resulted from the accelerated amortization of the remaining prepaid commitment fee asset related to the full repayment and termination of the Federal Reserve Bank of New York (FRBNY) Credit Facility more than two years early.
While earning net income for the quarter, AIG recorded a loss on a per share basis. The per share loss is the result of the deduction from net income available to AIG of two items that are treated as deemed dividends to preferred shareholders under generally accepted accounting principles. The first item is the difference of approximately $427 million between the carrying value of the preferred stock and the fair value of the shares of common stock exchanged for the preferred stock in the recapitalization. The second item is the commitment by AIG to pay the United States Department of the Treasury’s costs to dispose of all of its shares of AIG common stock, estimated at $385 million.
“We are pleased that we have taken the last, previously announced, non-cash charge for the termination of the FRBNY Credit Facility,” says Robert Benmosche, AIG president and CEO. “During the quarter, we demonstrated the strength and resiliency of our operations, and our focus on the fundamentals of providing innovative products and services showed the earnings power of our global franchises. We have continued to refine how we do business to leverage our global footprint, as we continue to focus on growth, sustained profitability and completely repaying the U.S. taxpayer."
AXA issued a statement to announce its Q1 figures. The company said:
• Total revenues were stable at Euro 28bn, down 2% on a comparable basis
• Life and savings new business value up 19% driven by a significant improvement in business mix
• Property/casualty revenues up 2% driven by continued focus on underwriting discipline
• Asset management revenues up 1%
"The first quarter reflected our continued focus on improving the profitability of our operations, consistently with our priorities set out early 2010," says Denis Duverne, deputy CEO of AXA.
"In life and savings, our ongoing initiatives to drive new business sales towards selected profitable segments that address clients' coverage needs continued to bear fruit, notably with a 16% growth in protection and health sales and an 11% growth in Unit-Linked sales in Continental Europe," he continues. "This, combined with a greater contribution from high-growth markets and a seasonally favorable country mix effect, drove a substantial increase in new business margin to 26%.
"Property and casualty revenues increased 2% benefiting from rate increases in most countries alongside higher volumes in personal lines and selective underwriting, particularly in commercial lines," Duverne adds.
"In asset management, revenues increased by 1%," he said. "Outflows continued in the first quarter but at a more moderate level than that of end of last year, as investment performance improved."
Eastern Insurance Holdings Inc. (EIHI) issued a statement reporting earnings for the three months ended March 31, 2011. EIHI reported net income of $1.9 million, or $0.22 per diluted share, for the first quarter of 2011, compared to net income of $1.9 million, or $0.20 per diluted share, for the same period in 2010. EIHI's net income from continuing operations was $1.9 million, or $0.22 per diluted share, for the first quarter of 2011 compared to net income from continuing operations of $945,000, or $0.10 per diluted share, for the same period in 2010. EIHI's diluted book value per share and tangible diluted book value per share were $15.24 and $13.67, respectively, as of March 31, 2011, compared to $14.88 and $13.38, respectively, as of Dec. 31, 2010.
Revenue from continuing operations for the first quarter of 2011 increased to $32.5 million compared to $27.6 million for the same period in 2010. Net premiums earned from continuing operations were $29.9 million for the first quarter of 2011 compared to $25.3 million for the same period in 2010. The increase in revenue and net premiums earned is due primarily to an increase in direct written premium production. Net investment income from continuing operations was $1.0 million ($705,000 after-tax) for the three months ended March 31, 2011, compared to $1.0 million ($733,000 after-tax) for the same period in 2010;
"I am pleased to report strong results in our workers' compensation insurance business for the first quarter of 2011," says Michael Boguski, president and CEO. "Our combined ratio in our workers' compensation insurance segment was 92.2% for the three months ended March 31, 2011, and our consolidated combined ratio was 97.8%. Our favorable results were driven by solid growth in workers' compensation insurance direct written premiums, positive audit premium, strong premium renewal retention results and renewal rate increases in each of the three months for the first quarter of 2011.
"During the first quarter of 2011, workers' compensation direct written premium increased 19.8% to $46.6 million compared to $38.9 million for 2010, driven by solid growth in all of our workers' compensation products at all of our regional offices," he continues. "I was particularly pleased with our renewal rate increases of 3.9% for the first quarter of 2011 compared to renewal rate decreases of 3.0% for the same period in 2010, a difference of 6.9 percentage points. We have now experienced four consecutive months of renewal rate increases on our book of business, with December 2010 marking the first month of positive rate change since 2005."
Erie Indemnity Co., in a statement, announced first-quarter 2011 earnings of $44 million, compared to earnings of $47 million in the first quarter of 2010. Operating income was $43 million in the first quarter of 2011 compared to $44 million for the same period one year ago. Also, the sale of Indemnity’s 21.6% interest in Erie Family Life Insurance Co. to the Erie Insurance Exchange was completed on March 31, 2011.
The management fee rate was 25% for both the first quarters of 2011 and 2010. Direct written premiums of the property/casualty insurance operations, upon which the management fee is calculated, increased 6.3% in the first quarter of 2011, due to a 3.2% increase in policies in force and modest increases in average premium. The year-over-year average premium per policy for all lines of business increased 2.1% at March 31, 2011, compared to a decrease of 1.3% at March 31, 2010.
The cost of management operations increased to $211 million in the first quarter 2011 from $192 million in the first quarter of 2010. First-quarter 2011 commissions increased $9 million compared to the same period a year ago. First-quarter 2011 non-commission expense increased $10 million compared to the first quarter of 2010. Of this amount, personnel costs increased $5 million, while the remaining increase was due to a $5 million expense reduction recorded in the first quarter of 2010 for a favorable ruling related to an outstanding judgment against Indemnity.
Prior to and through Dec. 31, 2010, the underwriting results retained by Erie Insurance Co. and Erie Insurance Company of New York accrued to the benefit of the Indemnity shareholder interest. Due to the sale of Indemnity’s property/casualty subsidiaries to the Exchange on Dec. 31, 2010, all property/casualty underwriting results accrue to the benefit of the subscribers (policyholders) of the Exchange, or noncontrolling interest, beginning in the first quarter of 2011.
Global Indemnity plc reported net income for the three months ended March 31, 2011 of $13.8 million or $0.45 per share, according to a statement. As of March 31, book value per share increased to $30.96 or 1.2% from $30.59 per share at Dec. 31, 2010.
For the three months ended March 31, 2011, the insurance operations’ gross premiums written increased 4.4%, and net premiums written increased 20.5%, compared to the same period in 2010. The increase in gross premiums is mainly due to growth in Diamond State's property/casualty brokerage units, Collectibles Insurance Services LLC, which was acquired in April of 2010, and our Vacant Express product, offset partially by decreases in Penn-America. However, the company says it is seeing signs that the small business market where Penn-America competes is improving. The increase in net written premiums is primarily due to the cancellation of a property quota share reinsurance treaty effective Jan. 1, 2011, and an increase in retention related to the U.S. property excess of loss treaty, which renewed on Jan. 1, 2011.
For the three months ended March 31, 2011, the reinsurance operations’ gross premiums written decreased 19.6%, and net premiums written decreased 19.2%, compared to the same period in 2010. Timing of new treaties and non-renewals can cause gross premiums written to vary widely in this segment. The decrease in gross and net premiums written is primarily due to cancellations of non-standard auto and workers' compensation treaties in 2011 that were not replaced, offset partially by several new casualty treaties written in 2011.
"We continue to see improvements in the fundamentals of our business," says Larry Frakes, president and CEO. "We experienced written premium growth in our core U.S. Insurance Operations of 4.4% in the quarter over the same period in 2010. Our brokerage property/casualty lines continued to grow while we also saw positive premium production from our agency businesses. Production trends in our Penn-America small business unit, while still down, were markedly improved from the 1st quarter of 2010. The Profitability Enhancement executed in the fourth quarter of 2010 is contributing to the 3.3-point decrease in our operating expenses.
"We also saw an additional $2.1 million reduction in corporate expenses again related to our expense control efforts and the completion of our re-domestication to Ireland in 2010," he adds. "Operating cash flow of $7.2 million was an $18 million improvement over the same period last year. Our first-quarter results were impacted by major worldwide catastrophes. Our Wind River Reinsurance Operations incurred $8.8 million in losses from the Japan earthquake and $3.0 million from the New Zealand earthquake. Even with these events, shareholders' equity increased by $12.7 million or 1.4% and book value per share grew at 1.2%."
Infinity Property and Casualty Corp., a national provider of personal automobile insurance, reported results for the three months ended March 31, 2011, in a statement.
Gross written premium grew 10.4% during the first quarter of 2011 compared with the same period in 2010 with growth in six of the eight Focus States. California, Infinity's largest state, grew 14.5% in the first quarter of 2011 compared with the same period in 2010.
Net and operating earnings declined in the first quarter of 2011 compared with the same period in 2010 primarily as a result of less favorable development on prior accident year loss and loss adjustment expense reserves recognized in the first quarter of 2011. Favorable development recognized in earnings during the first quarter of 2011 was $3.4 million, pre-tax ($0.18 per diluted share after-tax) and resulted primarily from bodily injury coverage in California and related to accident years prior to 2009. Favorable development recognized in earnings during the first quarter of 2010 was $16.7 million, pre-tax ($0.80 per diluted share after-tax).
"This quarter marks the sixth consecutive quarter of gross written premium growth for Infinity," states James Gober, Infinity's chairman, president and CEO. "From a profitability perspective, while our current accident year combined ratio is slightly outside of our target range due in part to winter weather-related losses, we expect by midyear that it will fall back in line with our expectations."
ING Groep NV issued a statement to announce its Q1 figures. The company said the following:
•
•
•
•
“Both the bank and the insurance company posted strong results in the first quarter, illustrating clear progress on their respective performance improvement programmes as they prepare for their futures as stand-alone companies,” says Jan Hommen, CEO of ING Group. “The restructuring of the Group is on track. We continue to work towards the full physical separation of the banking and insurance activities, and we are laying the groundwork this year for two IPOs of our U.S. and European and Asian insurance businesses so that we will be ready to proceed with transactions when market conditions are favorable. We continue to explore strategic options for our Latin American insurance business, and we are taking steps to meet the other restructuring demands imposed by the European Commission, including the divestment of ING Direct USA and the carve-out of WestlandUtrecht Bank from our Dutch retail banking business.
“Despite the far-reaching restructuring that the company is going through, we have continued to show solid commercial growth across our franchises, which is a testimony to the dedication and professionalism of our staff as we work hard to maintain the loyalty of our customers,” Hommen says. “On that strong foundation, we have been able to show a rapid recovery as ING comes out of the financial crisis. We have improved efficiency and built up strong capital buffers in the bank, while continuing to increase our lending to customers to support the economic recovery. As a result, ING is now in a position to repay a second tranche of support from the Dutch State out of retained earnings. And provided that this strong capital generation continues, we aim to repay the remaining support by May 2012 on terms that are acceptable to all stakeholders.”
Manulife Financial Corp. (MFC) issued a statement that reported significant progress in its business strategy of building sales growth in targeted areas and reducing equity market and interest rate sensitivity during the first quarter ended March 31, 2011. The company also reported strong capital levels and net income despite being impacted by the earthquake and related events in Japan.
Net income attributed to shareholders was $985 million for the first quarter ended March 31, 2011. This equates to fully diluted earnings per share, excluding convertible instruments of $0.54 and return on common shareholders' equity of 17.4%. These results were generated despite much higher equity market hedging costs and events in Japan. For the first quarter of 2010, MFC reported net income attributed to shareholders of $1,224 million or $0.68 per share and return on common shareholders' equity of 19.2%. With less of MFC's equity risk hedged in the prior year, the first quarter of 2010 results were higher due to substantial equity market gains and lower hedging costs.
First-quarter 2011 net income attributed to shareholders was $985 million compared to $1,224 million in the first quarter of 2010. First-quarter 2011 results included $111 million related to the direct impact of equity markets and interest rates, a charge of $151 million related to the earthquake in Japan and a number of other notable items.
"We are making excellent progress on our strategic plan: delivering sales in targeted lines, implementing hedging, improving product mix and profitability, maintaining very strong capital levels and delivering good customer value and advice," says CEO Donald Guloien. "We had strong sales growth in Asia, and we continued to diversify our business in Canada which posted first-quarter record sales across a broad spectrum of offerings. We see tangible signs of success from our repositioning efforts in the U.S., where record mutual fund sales were generated. We continue to reduce our sensitivity to equity markets and interest rates, while maintaining a strong capital position."
Markel Corp. issued a statement that reported diluted net income per share of $0.85 for the quarter ended March 31, 2011 compared to $4.33 for the first quarter of 2010. The combined ratio for the first quarter of 2011 was 112% compared to 101% for the first quarter of 2010. The combined ratio for the first quarter of 2011 included $69 million, or 15 points, of underwriting loss related to the Australian floods, the New Zealand earthquake and the earthquake and subsequent tsunami in Japan. The combined ratio for the first quarter of 2010 included $17 million, or 4 points, of underwriting loss on the Chilean earthquakes. Book value per common share outstanding increased 1% to $329.09 at March 31, 2011, from $326.36 at Dec. 31, 2010.
"Our first-quarter results were adversely impacted by losses from the catastrophes in Australia, New Zealand and Japan, and our thoughts are with those that have been affected by these tragic events," Alan Kirshner, chairman and CEO, comments. "Our financial strength provides a solid foundation for us to withstand these losses while continuing to build long-term value for our shareholders."
Marsh & McLennan Cos. Inc. reported financial results for the first quarter ended March 31, 2011, in a statement.
Consolidated revenue in the first quarter of 2011 was $2.9 billion, an increase of 9% from the first quarter of 2010, or 5% on an underlying basis. Underlying revenue measures the change in revenue before the impact of acquisitions and dispositions, using consistent currency exchange rates. Operating income rose 11% to $472 million. Adjusted operating income in the first quarter rose 8% to $473 million.
In the first quarter of 2011, net income rose 31% to $325 million, compared with net income of $248 million last year. This includes discontinued operations, which had a loss of $22 million in the first quarter of 2010 compared with income, net of tax, of $12 million in the current quarter. Earnings per share increased 29% to $.58 from $.45. Income from continuing operations increased 16% to $319 million, or $.56 per share. Earnings per share on an adjusted basis, which excludes noteworthy items as presented in the attached supplemental schedules, increased 10% to $.56, compared with $.51.
Risk and Insurance Services segment revenue increased 10% to $1.6 billion in the first quarter of 2011, or 4% on an underlying basis. Operating income increased 10% to $383 million, compared with $347 million. Adjusted operating income in the first quarter of 2011 increased 7% to $383 million from $358 million.
Marsh's revenue in the first quarter of 2011 was $1.3 billion, an increase of 10%, or 4% on an underlying basis. International operations underlying revenue increased 4% in the first quarter of 2011, reflecting growth of 21% in Latin America, 9% in Asia Pacific, and 2% in EMEA. In the United States/Canada region, underlying revenue grew 3%. Guy Carpenter's first quarter revenue increased 8% to $340 million, or 7% on an underlying basis.
"Our performance in the first quarter of 2011 reflects strong revenue growth across all of our operating companies," says Brian Duperreault, president and CEO. "Excellent results for Risk and Insurance Services reflect underlying revenue growth at Marsh and Guy Carpenter. Marsh's revenue growth was across all geographies, driven by continued high levels of new business development and client retention. Guy Carpenter's superior results were led by international operations, with the company producing its ninth consecutive quarter of underlying revenue growth.
"Our consulting segment produced strong revenue growth in the first quarter” Duperreault says. “Mercer's underlying revenue growth reflects the continued fine performance of its consulting and investments businesses. Oliver Wyman's impressive revenue growth was led by double-digit increases in a number of its industry sectors.”
ProAssurance Corp. reported in a statement that operating income was $45 million or $1.46 per diluted share for the first quarter of 2011. Net income for the period was $48 million or $1.55 per diluted share.
Book value per share was $61.64 at the end of the first quarter, a 2% increase since year end 2010. Shareholders' Equity also increased 2% in the quarter.
Gross written premium was $161 million in the first quarter of 2011, a 2% increase over the first quarter of 2010. ProAssurance's acquisition of American Physicians Services (APS) added $20 million to the company's gross written premium in the first quarter, which more than offset a $17 million decline in its non-APS business.
Net earned premium in the first quarter of 2011 was $132 million, including $14 million from APS. This is a 7% increase over the $123 million in net earned premium in first quarter 2010.
Retention in the company's medical professional liability physician book (including APS) was 90% in the first quarter, compared to 89% in the first quarter of 2010. ProAssurance calculates retention by comparing expiring premium on renewed risks against total expiring premium.
Average renewal pricing on ProAssurance's medical professional liability book (including APS) was 4% lower than expiring premium during the first quarter of 2011. This compares to a 1% average decrease over expiring premium in first quarter 2010.
Loss severity trends continue to develop favorably compared to our previous expectations. The company had $40 million of net favorable loss reserve development in the first quarter of 2011, $5 million of which came from the APS book of business. This compares to $25 million of favorable development in the first quarter of 2010.
"We continue to produce solid results by executing a disciplined strategy that has increased the value we deliver to our shareholders and enhanced the security we provide to our policyholders," says W. Stancil Starnes, chairman and CEO. "The changing landscape of health care, and the evolving needs of the people and institutions delivering that care, demand a company such as ProAssurance—a company that combines financial strength, unrivaled expertise in claims handling, skilled underwriting, innovative risk management and the unmatched customer promise of Treated Fairly."
Sun Life Financial Inc., according to a statement, reported operating net income of $472 million for the first quarter of 2011, compared with operating net income of $434 million in the same period last year. Diluted operating earnings per share were $0.79 in the first quarter of 2011 compared to $0.74 in the first quarter of 2010. Operating earnings per share were reduced by $0.03 in both the current and comparative period from the dilutive impact of convertible securities.
Reported net income was $438 million or $0.76 per share in the first quarter of 2011, compared to $414 million or $0.73 per share in the same period last year. Operating net income for the first quarter of 2011 was up 9% from the prior year reflecting continued growth in assets under management, gains from increases in the value of real estate properties, strong investment experience, increases in equity markets and favorable mortality and morbidity experience. This was partially offset by increased losses in the corporate segment.
“Sun Life Financial started 2011 with solid results compared to the same period last year with strong performance across all of our operating segments,” Donald Stewart, CEO, says. “Our strategy of diversifying across businesses and geographies, along with the prudent use of capital and strong risk management, allows us to continue to invest in our businesses while generating solid returns for investors.”
“We have also responded to an evolving regulatory environment—including the implementation of wide-ranging changes to financial reporting under IFRS— while remaining focused on execution and growth opportunities,” Stewart said, noting that Sun Life’s assets under management increased by 8% year-over-year to $469 billion.
“Sun Life’s Canadian operations reported strong growth in individual life and health insurance and we continue to expand our capabilities in Asia with the announcement of a new joint venture company in the Philippines that will expand our distribution reach and drive future growth in the region,” he adds.
XL Group plc issued a statement reporting its first-quarter 2011 results. The company highlighted the following:
•
•
•
•
•
•
•
•
•
•
"XL's first quarter results demonstrate resilience in the face of global catastrophic events," CEO Mike McGavick says. "We are proud of the roles our insurance and reinsurance solutions are playing in the recovery of the devastated economies. Our risk management discipline again resulted in estimated losses from the quarter's three major catastrophes that are well within our expected levels. As markets respond to these events and others, we believe our underwriting excellence, operating efficiency and capital strength put XL in an exceptional position to pursue the opportunities provided by improving market conditions."
