From Underwriting Results to Reserve Releases, ALIRT Charts Wrap Up 2011

According to ALIRT Insurance Research, underwriting results for the ALIRT P&C Composite deteriorated sharply in 2011 despite considerable reserve releases, due mainly to catastrophe losses.

The ALIRT P&C Composite consists of the 50 largest U.S. personal and commercial-lines insurers, according to the Windsor, Conn.-based firm.

In general, ALIRT says earnings are lower, as is surplus, while investment returns are falling.

On the following pages, ALIRT provides charts that break down in detail the underwriting results, investment results, reserve development, written-premium changes and surplus changes for the ALIRT P&C Composite.

All charts were created by ALIRT Insurance Research and used with permission.

Click “Next” to begin the slideshow.

2011 accident year underwriting results deteriorated sharply and, despite substantial reserve releases, the reported combined ratio was also significantly worse in 2011, due to considerable weather-related losses, according to ALIRT. The 2011 operating ratio worsened, reflecting the substantial catastrophe losses and relatively weaker investment income.

Revenue is recovering, ALIRT says, with modest-to-moderate growth in both direct and net premium after bottoming out in 2008-2009.

Composite surplus grew 2.6 percent during 2010, but fell 2.2 percent in 2011 due to weaker earnings and sizeable dividends paid, ALIRT notes.

Premium leverage remains fairly low and is leveling off, ALIRT says.

Returns on equity continue to decline, according to ALIRT, falling sharply in 2011 due to catastrophe losses, and in spite of a lower equity (surplus) base.

Returns on earned premiums have generally trended down since 2008. ALIRT says this trend accelerated in 2011, driven by catastrophe losses.

The ALIRT Composite has not generated an underwriting profit since 2007, ALIRT says, however despite low interest rates, investment gains continue to outweigh poor underwriting results.

Investment yields continue to be dampened by low interest rates, ALIRT finds. In 2009 and 2010, net capital gains boosted returns significantly, but in 2011 net capital gains were break-even.

Favorable prior year reserve development was declining as the soft market dragged on, but reserve releases were again quite large for the ALIRT Composite in 2011.

The reported combined ratio has been helped by favorable reserve development over the last several years. This was particularly noticeable in 2011 as reserve releases lowered the reported combined ratio for the ALIRT Composite by 2.4 points.

Page 1 of 11

Resource Center

View All »

Contractors General Liability Coverage 102

What is a prior work exclusion? Which option is right for my client? Why do...

Sign up today to get a 50% matching credit -...

Insurance marketing sometimes seems like it's a game of swings and misses, but we're here...

Guide: 5 Steps to Selling Cyber

Cyber risk and data security is on the agenda of every business owner and executive....

Citation Correlation

Do rigger and signalperson qualifications correlate with the cause of crane and rigging accidents? ...

Complete Guide to Electronic Signatures in Property & Casualty Insurance...

In property and casualty insurance, closing new business quickly is key. Learn how to leverage...

INSTANT ACCESS: Complimentary Sales Closer Questionnaires

Help property owners or managers compare your commercial residential property insurance coverage vs. the competition....

Determining Vacant Property Perils and Valuations

Are your clients fully covered for Vacant Properties? In this economic climate, your insureds may...

Risk Management for Law Firms

This package of 3 concise risk management articles offers straightforward content and practical suggestions law...

Guide: Top 15 E&O Risks-And How To Avoid Them

Accidents happen. But when it's an errors and omissions oversight, that accident can open your...

We'll Show You How to Reach Your Sales Goals

Whether you work alone or have a team of agents working for you, we can...

Claims Connection eNewsletter

Breaking news on disasters, fraud, legal trends, technology, and CE initiatives for the P&C claim professional – FREE. Sign Up Now!

Claims-Handling Guidelines

Claims Magazine is providing the following free guidelines and regulations in order to help adjusting professionals stay abreast of each state’s unique property and casualty claim-handling requirements.

View our State Guidelines »

Advertisement. Closing in 15 seconds.