Filed Under:Markets, Personal Lines

Auto Insurers’ 3Q Earnings Hit by Investments, Cats and Prior-Year Losses

NU Online News Service, Nov. 3, 2:13 p.m. EST

Auto insurers Mercury General Corp., Infinity Property and Casualty Corp. and Safety Insurance Group Inc. each report drops in third-quarter income, with Los Angeles-based Mercury General posting a $3.8 million loss.

Mercury General says it earned $96.8 million during the 2010 third quarter but was hurt this year by net-realized investment losses of $43.5 million, compared to a gain of $56.2 million a year ago.

Mercury General says Hurricane Irene caused $4 million in pre-tax losses during the quarter. The company’s 98.3 third-quarter combined ratio was affected by unfavorable development of $11 million due to re-estimates of California bodily-injury claims.

Infinity says third-quarter net income dropped 80.1 percent to $6.1 million, also due to unfavorable development on prior accident year losses and loss-adjustment expenses reserves of $4.8 million.

The unfavorable development is primarily caused by accident year 2010 from increases in severity on personal-injury protection in Florida and bodily injury in California, Birmingham, Ala.-based Infinity says.

The third-quarter combined ratio was 99.3 compared to 88.4 last year and underwriting income fell 93.5 percent to $1.7 million.

Massachusetts auto writer Safety reports a 42.9 percent drop in third-quarter net income to $8.8 million from $15.4 million a year ago during the same period.

Catastrophe claims hurt earnings as a $23.1 million increase in loss and loss-adjustment expenses to $111.5 million during the quarter was caused by a wind and hail storm and Hurricane Irene—which was downgraded to a tropical storm when it hit Massachusetts.

Catastrophe losses of $23.7 million were largely to blame for United Fire & Casualty Co. reporting a $6.7 million third-quarter loss compared to a profit of $890,000 million a year ago during the third quarter.

The Cedar Rapids, Iowa-based property and casualty insurer says it was hurt by a straight-line wind storm in its home state, which caused $5 million in losses. Another $4.6 million in losses was generated by a wind a hail event affecting Iowa, South Dakota, Nebraska and Missouri.

Catastrophe losses this year have been $71 million, adds United Fire.

Also this week, international specialty insurer HCC Insurance Holdings says net income for the quarter was down 35 percent to $60.4 million.

Catastrophe losses at the Houston-based company were $34.6 million, which added 6.2 points to its combined ratio for the third quarter of 92.8 compared to 82.2 last year during the same period.

Results included $88 million in net favorable development primarily in U.S. and international directors’ and officers’ lines of business, offset by $87.4 million in adverse development in professional liability in the United Kingdom, says HCC.

Meadowbrook Insurance Group Inc. reports third-quarter net operating income of $9.5 million compared to $14.6 million. Net income was about $9.8 million from about $15 million a year ago.

Storm losses for the Southfield, Mich.-based company were 43.7 million after tax, which added 2.9 points to its combined ratio of 100.

ProAssurance Corp., a medical professional liability insurance provider, reports net income of $43.7 million for the third quarter compared to $51 million a year ago.

Net premiums written increased to $164.8 million from about $150 million last year but the Birmingham, Ala.-based insurer took a net realized loss on investments of nearly $12 million.

Bermuda-based American Safety Insurance Holdings says third-quarter net earnings were $5.8 million compared to $7.2 million for the 2010 third quarter.

American Safety says a worsening of its third-quarter combined ratio to 101.3 from 98.3 last year was a bigger loss ratio caused by market conditions, not Hurricane Irene losses. Plus, technology investments and lower fee income increased the company’s expense ratio. 

Top Story

Take a look at the damage that Hurricane Gonzalo left behind in Bermuda

Hurricane Gonzalo ended up weaker than expected when it hit Bermuda last week, but damage on the island was still widespread.

CE & Training

One Low Price for Complete Access to All Courses

Choose from National Underwriter's complete library of courses available in your state to get the credits you need quickly and affordably. Take advantage of the Open Pass Package for only $49. Click here to start your training today!

More Resources

Comments

eNewsletter Sign Up

Personal Lines Pro eNewsletter

Critical insights into the personal auto, homeowners, and other consumer insurance markets to help P&C professionals stay informed – FREE! Sign Up Now!

Mobile Phone
         
Close

Advertisement. Closing in 15 seconds.