From the November 21-28, 2011 issue of National Underwriter Property & Casualty • Subscribe!

State Auto to Seek Homeowners Rate, Quota Share Reinsurance

State Auto Financial Corp.’s CEO says the insurer will seek a 20 percent price increase in 2012 in order to keep up with historic loss trends, and the company is turning to the reinsurance market for a quota-share treaty.

“Even after increasing prices by more than 30 percent over the last three years, we’ll need another 20 percent price increase,” Chairman and CEO Bob Restrepo said during a Nov. 8 conference call.

To date, State Auto has posted a net loss of $247.4 million. The super-regional Columbus, Ohio-based insurer recorded a third-quarter net loss of $58.7 million and a combined ratio of 122.4 compared to 105.9 during the same period a year ago.

State Auto has catastrophe losses of $232.9 million—a record for the company—so far this year, Restrepo said. The company has seen an increase in frequency of property losses in the $50,000 range, he added, and large liability losses hurt ex-catastrophe homeowners’ results.

Written premiums in homeowners over the first nine months declined 6.6 percent, while prices were up 2.5 percent.

Restrepo said prices have increased 10 percent already this year.

Pricing actions in homeowners have affected the insurer’s auto-insurance segment. Policy counts are down in State Auto’s core states of Ohio, Indiana, Kentucky and Tennessee, he said. Written premium for the third quarter in auto was down 7.9 percent, driven by run-off of the company’s nonstandard auto business to Hallmark Financial Services.

Restrepo told analysts the company is looking to pursue a quota-share reinsurance treaty to cover about 65 percent of its homeowners business.

State Auto has taken action to get geographic diversification, but “we just haven’t been able to do it fast enough using the conventional means, which is why we’ve opted to pursue this quota share,” said Restrepo.  

Comments

Resource Center

View All »

Top 10 Legal Requirements for E-Signatures in Insurance

Want to make sure you’ve covered all your bases when adopting e-signatures? Learn how to...

Get $100 in leads with $0 down!

NetQuote's detailed, real-time leads have boosted sales for thousands of successful local agents across the...

The Growing Role of Excess & Surplus Lines in Today’s...

The excess and surplus market (E&S) provides coverage when standard insurance carriers cannot or will...

Increase Sales Conversion with this Complimentary White Paper

This whitepaper will share proven techniques - used by many of the industry's top producers...

D&O Policy Definitions: Don't Overlook These Critical Terms

Unlike other forms of insurance where standard policy language prevails, with D&O policies, even seemingly...

Environmental Risk: Lessons Learned from Willy Wonka and the Chocolate...

Whether it’s a chocolate factory or an industrial wastewater treatment facility, cleanup and impacts to...

More Data, Earlier: The Value of Incorporating Data and Analytics...

Incorporating more data earlier in claims lifecycles can help you reduce severity payments by 25%*...

How Many Of Your Clients Are At Risk Of Flood?

Every home is vulnerable to flooding. Learn four compelling reasons why discussing flood insurance with...

Gauging your Business Intelligence Analytics Capabilities and the Impact of...

Big Data, Data Lakes and Data Swamps, How to gauge your company's Big Data readiness....

Extending Contact Center Capabilities Across the Insurance Enterprise

Today advancements in technology are making a big impact on business and society. To yield...

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!

Advertisement. Closing in 15 seconds.