A number of insurers have begun to release their financial results for Q4 2010. The following is a compilation of their announcements:
AMERISAFE Inc., a specialty provider of hazardous workers' compensation insurance released a statement announcing its results for the fourth quarter ended Dec. 31, 2010.
AMERISAFE reports that gross premiums written increased for the quarter in comparison to the same period in the previous year. This growth was driven by less negative payroll audits and related premium adjustments for policies written in previous periods. These adjustments reduced premiums written $2.5 million in the fourth quarter of 2010 compared to a reduction of $8.2 million in the fourth quarter of 2009.
Additionally, AMERISAFE increased the current accident year loss ratio for 2010 from 81.2% to 81.8% in Q4 2010. Claims frequency also increased in 2010. Severity was lower compared to 2009, but considerably higher than in years prior to 2009. During the quarter, the company experienced favorable case development for prior accident years, which reduced loss and loss adjustment expenses by $7.7 million. Accident years 2006, 2007 and 2008 were the primary contributors to the favorable development.
The underwriting expense ratio continued to be competitive in the fourth quarter. In the quarter, the AMERISAFE updated forfeiture assumptions for certain stock options granted in November 2005, resulting in additional non-cash compensation expense of $1.2 million. Offsetting this expense were lower fixed costs.
"In the fourth quarter, our gross premiums written showed a year-over-year increase for the first time since 2008,” AMERISAFE Chairman and CEO Allen Bradley said in a statement. “In addition, pricing improved slightly from the third quarter. However, the industry environment remains challenging, with robust price competition fueled by excess capacity and muted demand."
Aviva Plc issued a statement regarding its year-end results for 2010. The company called out the following statistics:
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“We’ve gone from strength to strength in 2010. In a tough external environment we’ve outperformed," Andrew Moss, group chief executive said in the statement. "Operating profits are up 26% and we are able to reinvest in the business and pay a healthy and growing dividend.
“Over the last few years, we’ve grown the business, significantly reduced costs and strengthened the balance sheet," he continued. "As a result, we’ve created a good platform for the next phase of growth. We have a clear strategy and we are meeting our customers’ needs. By focusing on what we do best in the markets where we have strength and scale, we will continue to prosper in 2011.”
Citizens Inc. reported its results for the fourth quarter and full-year ended Dec. 31, 2010.
Consolidated results:
• Total revenues – Total revenues increased 3.1% for the quarter ended December 31, and 1.2% for full-year 2010, due to growth in both premiums and investment income. Total revenue, excluding the change in fair value of warrants, increased 3.5% and 2.8% for the same periods.
• Net income – Net income rose by $1.4 million for the quarter ended December 31, and $0.7 million for full-year 2010. On an after-tax basis, realized gains contributed $5.2 million, or $0.11 per share of Class A common stock, to full-year net income, unchanged from 2009. On an after-tax basis, the non-cash charge for the change in fair value of warrants increased net income in 2010 by $0.2 million, which would be less than 1 cent per share of Class A common stock, compared with $3.2 million, or $0.04 per share of Class A common stock, in 2009.
• Book value – Book value per share of Class A common stock rose 5.3% to $4.58 at Dec. 31, 2010, compared with $4.35 at year-end 2009. Year-end 2010 book value declined $0.19 from September 30, 2010, due to market declines in bond values.
"During 2010, Citizens continued to offer life insurance products emphasizing living benefits in our targeted domestic and international markets," Rick Riley, vice chairman and president, said in a statement. "While the business and investing environments remained challenging, the company experienced growth in revenues and net income, reflecting both an increase in premiums from our insurance operations and an increase in investment income over 2009 as higher invested assets offset declining yields over the course of 2010."
"Full-year 2010 net realized gains were comparable to 2009 as the company again sold previously impaired mutual fund holdings as well as below investment-grade securities in order to recover taxes paid on prior year gains and to accomplish current year consolidated return tax-savings," Riley continued. "Though the contribution to net income of full-year realized gains were unchanged, the year-over-year comparison was impacted by another non-operating item—a significantly lower gain on the change in the fair value of outstanding warrants, which relates to changes in the market value of our Class A common stock."
FM Global issued an announcement that it ended 2010 with a strong underwriting and investment performance, which resulted in the company's largest surplus ever.
The mutual insurance company reported that, in 2010 policyholder surplus grew 16% to US$7.3 billion—a company best—due to a combination of solid underwriting and investment results, despite an uptick in small and medium-sized insured natural disasters and significant volatility in the financial markets. Gross premium in force grew by approximately 2% to US$4.8 billion and net income was US$687 million.
Additionally, the company posted a profitable combined ratio of 82.8%, better than forecast, due in large part to policyholders' diligent risk improvement efforts. FM Global's client (account) retention rate held firm at 94%—significantly higher than industry averages—and has consistently since 2004.
Among the company's 2010 highlights, FM Global:
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"As FM Global reflected on the past during its anniversary year, we revisited our core values, which are as relevant and steadfast today as they were 175 years ago," Shivan Subramaniam, FM Global chairman and CEO, said in a statement. "What has changed, however, is that today we are protecting businesses that are vastly more sophisticated and global in scope. And as our clients formulate and implement strategies to better protect their businesses and make them more profitable in the future, we are right there with them, helping them keep their properties safe, and the value they provide, intact."
Patriot National Insurance Group, a provider of workers' compensation insurance and services, announced that its insurance company subsidiary, Guarantee Insurance Co., reported total net written premium of $63.1 million in 2010, an increase of 53.6% from $41.1 million reported in 2009.
Guarantee's 2010 combined ratio was 92.8%, compared to 100.2% in 2009, a decrease of 7.4%. Loss and loss adjustment expense was 76.0%, down 3.5% from 78.8% in 2009. Net underwriting and other operating expenses declined 21.5% from 21.4% in 2009 to 16.8% in 2010.
"We are extremely pleased with Guarantee's 2010 results," Steven Mariano, chairman & CEO of Patriot National Insurance Group and Guarantee Insurance Co., said in a statement. "By every metric, Guarantee has achieved year over year improvement. We have seen profitable growth in alternative market and traditional workers' compensation insurance, while at the same time we have made significant progress in reducing operating expenses.
Guarantee Insurance's statutory risk-based capital ratio increased 68% to 380% in 2010. Guarantee completed 2010 with $92.9M direct premium written. By segment, $19.1M was in agency-owned captives, $38.4M in investor-owned captives, $20.1M in alternative market large premium policies and $15.3M in traditional, small premium workers' compensation policies.
Jackson National Life Insurance Co. issued a statement regarding its 2010 year-end financial results. During 2010, Jackson achieved record sales and deposits of $19.8 billion, and recorded an IFRS pretax operating income of $1.3 billion. Total sales and deposits climbed 30% over 2009, driven by a 47% increase in variable annuity (VA) sales to nearly $14.7 billion.
The IFRS pretax operating income increased 33% over 2009, due primarily to higher spread and fee income. Jackson’s 2010 IFRS net income of $509 million was lower than the $670 million reported in the prior year due largely to the benefit from the reversal of a $319 million tax valuation allowance in 2009. Total IFRS assets increased to $107 billion at the end of 2010, up from $88 billion at the end of 2009.
“In 2010, Jackson extended its track record of generating sustainable, profitable growth,” Mike Wells, Jackson’s president and CEO, said in a statement. "Jackson earned more than a half-billion dollars in IFRS net income, which the company achieved in six out of the past seven years."
Jackson, an indirect wholly owned subsidiary of the United Kingdom’s Prudential plc, finished 2010 with record retail sales and deposits in the fourth quarter of nearly $5.5 billion. Annuity net flows (total premium minus surrenders, death benefits and annuitizations) of $10.9 billion in 2010 were 38% higher than 2009. During 2010, Jackson ranked second in variable annuity net flow, according to reporting by SimFund VA. At Dec. 31, 2010, Jackson had $4.6 billion of regulatory adjusted capital, more than nine times the regulatory requirement, up from $4.0 billion at the end of 2009.
"Jackson’s strong earnings performance was the result of higher spread income and higher separate account fee income, which increased due to substantial positive net flows and the improved equity markets," said Chad Myers, Jackson’s EVP and CFO. "Furthermore, Jackson processed record levels of new business in 2010, yet maintained a high level of efficiency and award-winning customer service standards in its operations, keeping its expense ratio flat compared to 2009.”
QBE Insurance Group released a statement concerning its 2010 financial results. In regard to the Americas Division, gross written premium totaled $5.165 billion in 2010, an increase from the $4.0 billion written in 2009. The Americas 2010 combined operating ratio was 89.7%, unchanged from the previous year.
"QBE the Americas continues to focus on its core strategy, delivering sound returns to its shareholders, through the continued product and geographic diversification of our portfolio," John Rumpler, president and CEO of QBE the Americas, said in the statement. "The quality acquisitions undertaken in the U.S. and Latin American markets in 2010, together with a focus on improving the efficiency and effectiveness of our existing businesses, have supported the performance of the division.
"The investments we are making in product, process and technology will enhance and improve our delivery of greater value and service to our clients and intermediary partners. Along with the benefits from the recently announced acquisitions to be completed during the first half of 2011, this sets the Americas Division to build further on our profitability objectives," Rumpler continued.
State Farm Group recently released a statement concerning its 2010 financial results. According to the release, the insurer’s combined net worth for the State Farm group increased in 2010 by $3.1 billion to end the year at $61.2 billion. The primary reason for the improvement was a $1.9 billion increase in the value of the property/casualty (P&C) companies' unaffiliated stock portfolio (net of deferred tax), State Farm said. The increase comes after a $4.8 billion increase in net worth in 2009. That followed a $10.4 billion decrease in 2008. State Farm group's net worth is 40% higher than it was 10 years ago.
The P&C companies also reported a $3.1 billion underwriting loss in 2010, a $0.6 billion improvement from 2009.
"2010 was another economically challenging year for many of our customers," said State Farm SVP, treasurer and CFO Paul Smith. "State Farm has maintained the financial strength needed to serve our customers. We attribute that strength not only to our continued focus on the customer, but also to our commitment to the fundamentals of our business."
State Farm said it reported $1.8 billion in after-tax net income in 2010, compared with $0.8 billion in net income in 2009. The improvement in 2010 was driven by the P&C companies' improved results.
"While it is productive to examine our financial results each year," Smith said, "our priority is to achieve long-term operating results that allow us to maintain a level of financial strength that ensures long-term sustainability. This strategy is what has allowed us to fulfill the promises we have made throughout the 88 years we have been in business."
The P&C companies reported a pre-tax operating gain of $1.0 billion in 2010, which includes the underwriting loss of $3.1 billion, offset by investment and other income of $4.1 billion. This compares with a pre-tax operating gain of $0.4 billion in 2009, which included investment and other income of $4.1 billion and an underwriting loss of $3.7 billion. The State Farm group's net worth is also affected by the results of operations of non-P&C affiliates, which resulted in a gain of $0.6 billion in 2010.
Auto - State Farm's auto insurance business represents 62% of the P&C companies' combined net written premium. Earned premium was $31.4 billion, an increase of 1.6% from 2009. Incurred claims and loss adjustment expenses were $26.8 billion. The underwriting loss was $2.8 billion.
Comparable 2009 figures were: earned premium, $30.9 billion; incurred claims and loss adjustment expenses, $26.2 billion; underwriting loss, $2.7 billion.
Health - The individual health insurance operations for State Farm Mutual reported an underwriting loss of $52 million. Net written premium was $712 million.
Comparable figures for 2009 were: underwriting loss, $29 million; net written premium, $717 million.
Life - State Farm's life affiliates—State Farm Life Insurance Co., State Farm International Life Insurance Co. Ltd. and State Farm Life and Accident Assurance Co.—added $21 billion of total life insurance in force during the year, bringing the companies' total insurance in force to $757 billion on Dec. 31, 2010.
The life affiliates reported premium income of $4.6 billion in 2010, an increase of $32 million compared with 2009. In 2010, after-tax net income was $456 million. Net income was $454 million in 2009. Results for 2010 included $663 million in dividends to policyholders, compared with dividends of $645 million in 2009.
SulAmerica S.A. issued a statement regarding its 2010 year-end financial results. According to the report, SulAmerica registered total net income in 2010 of R$614.0 million, increasing 48.5% over 2009.
SulAmerica's insurance premiums grew by 15.2%, coming to R$8.4 billion. For the year, the total loss ratio came to 71.1%, declining 360 bps in relation to 2009. The combined ratio decreased 220 bps, coming to 97.5%.
In the fourth quarter, the insurer's total net income came to R$286.3 million, with an increase of 91.1% in relation to the same quarter of 2009. During this period, recurring net income was R$158.3 million, excluding the effects of non-recurring events registered during the quarter. Revenue from insurance premiums exhibited an increase of 16.1% between the quarters compared, totaling R$2.2 billion. The loss ratio stood at 65.6%, declining 750 bps in relation to the fourth quarter of 2009.
In 2010, health insurance premiums, which represent nearly 63% of the company's total insurance premiums, went up 17.3% in relation to 2009, reaching R$5.3 billion, with two million insured members. The performance of the group health insurance portfolio was explained by the expansion of new sales and by the price increases applied to existing policies, SulAmerica said.
"This is the largest result ever achieved by the company in its entire history of more than 115 years," Thomaz Cabral de Menezes, SulAmerica's president, said in a statement. He goes on to explain that, in recurring terms, net income was R$426.6 million, also exceeding the results of previous fiscal years assessed on the same basis.
