The P&C insurance industry’s combined ratio improved to 94.7 in the first quarter of 2013 as premium increases and declines in losses boosted the sector to a second consecutive Q1 underwriting profit this year, according to A.M. Best’s most recent financial review.
Last year’s combined ratio after the first quarter was 97.4. The industry’s policyholders’ surplus also increased 6 percent to reach a new record amount ($618.3 billion) as of March 31.
Looking at the combined ratios of the five insurers with the most gross premiums written in the first quarter, all but one of them — Liberty Mutual, who saw the highest amount of premiums written, but also experienced a climbing combine ratio of 109.1 — saw improvements in 2013. The other four top ranked P&C insurers were Travelers Group (88.7 in 2013; 92.8 in 2012), AIG (97.8 in 2013; 110.8 in 2012), The Hartford Insurance Group (92.9 in 2013; 93.8 in 2012) and Zurich Financial Services NA (89.9 in 2013; 97.4 in 2012).
Losses from catastrophe events in the first quarter were modest; year-on-year price increases also boosted underwriting results.
As the net income for the personal lines segment grew from $4.9 billion in the first quarter of 2012 to $5.3 billion in Q1 2013, A.M. Best notes that pricing in personal lines remains strong, with the homeowners and personal automobile liability lines both showing solid increases in direct premiums written (DPW). Several commercial lines showed strong increases in DPW, notably workers’ compensation (11.1 percent), general and products liability (8.3 percent), commercial multiperil (7.8 percent) and commercial auto liability (7.6 percent). Continued rate increases and exposure growth have also contributed to the growth in premium for commercial lines.
Personal lines’ combined ratio for the first quarter of 2013 was 95.7, compared to 96.9 for the same period in 2012.
In terms of the personal lines segment, A.M. Best lists the combined ratios from the first quarter of both 2012 and 2013 of the five largest personal insurer groups (by gross premiums written): State Farm Group (97.5 in 2013; 97.5 in 2012), Farmers Insurance Group (100.3 in 2013; 105.4 in 2012); Allstate Insurance Group (96.0 in 2013; 93.8 in 2012), Nationwide Group (99.2 in 2013; 100.4 in 2012) and Progressive Group (92.3 in 2013; 93.6 in 2013).
The reinsurance industry also finished the first quarter of 2013 strongly, posting an underwriting gain of $1.3 billion, according to A.M. Best. Last year’s Q1 underwriting gain was $9.5 million. The reinsurance sector’s combined ratio improved nearly 20 points from its Q1 2012 mark of 93.4 to its Q1 2013 mark of 76.6.
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