While the total market share of the 10-largest property-casualty insurance groups edged closer to 50 percent last year, the playing field spread out a little bit more for commercial lines insurers in 2006, according to figures compiled from a National Underwriter subsidiary, Highline Data. The same insurance groups comprised the top 10, but some took slightly smaller pieces of the overall pie.
Indeed, the combined market share of the top 10 insurers–based on direct written premiums for all lines of business, and across all regions–was 48.6 percent in 2006, information from regulatory filings published online in Highline Data’s Insurance Analyst PRO database show.
According to Highline Data market share reports for the prior two years, the same 10 insurance groups took slightly smaller slices of the overall pie, grabbing a 48.2 percent share in 2005 and 47.9 percent in 2004.
For all lines of insurance and all regions combined, Omaha, Neb.-based Berkshire-Hathaway exhibited the greatest increase in market share among the top 10 groups–up 0.7 percentage points since 2004. While three other groups–American International Group, Liberty Mutual Group and Nationwide–also had small gains, shares for all the other six groups tumbled.
Berkshire was the only group among the top 20 to record double-digit growth in direct written premiums in 2006, and one of only four groups among the top 100 to post a double-digit jump in all three years.
All totaled, direct premiums for the industry grew just 3.1 percent on average in each of the last three years, suggesting the rest of the pack merely coasted along, barely keeping pace with growth in the overall economy (based on gross domestic product).
Tables attached to this story show the individual market shares for the last three years for each of the top-100 groups overall, as well as the top 50 groups writing commercial lines, and the top 50 personal lines groups.
While market shares, premiums, loss ratios and commission rates shown are for all lines combined, and for all states and territories taken together, similar reports are available for specific lines, combinations of lines, single states or regions of the country.
Although Berkshire leapt over personal auto specialist Progressive of Mayfield Village, Ohio, to take eighth place in the overall market-share ranking, the jump wasn’t entirely attributable to that ubiquitous lizard hawking auto insurance for Berkshire’s GEICO companies.
In fact, the commercial lines market-share report reveals that while the top 10 commercial lines writers lost 1.4 points of market share since 2004–with the top 10 share falling from 47.2 percent in 2004 to 45.8 percent in 2006–Berkshire-Hathaway, now ranked 12th among commercial writers, posted a market share gain of 0.7 percentage points for commercial lines.
Digging deeper into the composition of Berkshire’s commercial lines book reveals that much of the group’s 22.1 percent growth rate in commercial lines direct premiums in 2006 is attributable to the workers’ compensation line.
Excluding workers’ comp, Berkshire’s direct premiums still jumped 7.5 percent in 2006, with its biggest and smallest lines (commercial liability and commercial auto) showing declines, and its commercial property premiums nearly tripling.
While less than 30 percent of Berkshire’s $4 billion in commercial direct premiums come from workers’ comp, acquisitions in the California comp market have fueled an average annual rate of growth of 200 percent for the group in the last three years, and a 2006 jump in premiums of 90.8 percent.
Ninety-three percent of Berkshire’s $1.1 billion in comp premiums come from California–a state where the group wrote just $15 million in comp in 2003, and where the industry saw premiums slide 17 percent in 2006 as a result of rate declines.
Berkshire-Hathaway’s largest line remains personal auto, where the GEICO companies maintained a fourth-place ranking with over $11 billion in direct premiums, growing just shy of double digits at 9.9 percent in 2006.
For the industry overall, direct premiums for the personal auto line–growing by just 0.5 percent in 2006–depressed the overall personal lines growth rate. With the auto line accounting for 73 percent of personal lines premiums, a 5.7 percent jump in the other personal line–homeowners–was barely perceptible in the personal lines totals, moving the sector’s growth rate to just 1.8 percent overall for 2006.
The property lines–homeowners and commercial property–were the big gainers for the industry in terms of growth. While commercial auto direct premiums declined slightly, commercial property direct premiums soared 13.3 percent in 2006.
Even in property lines, however, premium growth rates for individual groups and for the industry vary widely by region.
An accompanying summary table reveals some of the pain endured by southern homeowners in recent years. In spite of widely reported decisions of major personal lines carriers to cut exposures in hurricane-prone states, direct premiums still jumped 9.7 per year on average for each of the last three years in the South.
The South is also the only region where commission rates on homeowners business showed an obvious slide–from 13.8 percent in 2004 to 13.3 percent in 2006. In other regions, commission rates hovered around the same levels over the three-year period.
Meanwhile, pure loss ratios–direct incurred losses divided by direct earned premiums–give some indication of the relative performance of insurance groups in terms of overall profit.
While these loss ratios varied widely in 2006, Chubb and Travelers posted the lowest personal lines loss ratios among the top 20 insurance groups–each about a dozen points below the industry average of 55. For commercial lines, Chubb and Berkshire were the best performers, with loss ratios roughly 14 points below the industry’s 49.4 ratio last year.
Direct premium, loss and expense information provided on the state pages of the annual statement–from which the accompanying market share exhibits were derived–do not include all of the loss adjustment and underwriting expense data needed to calculate insurer combined ratios, which are a more complete measure of profitability.
(For more information about the data, contact Chris Rogers of Highline Data at 617-441-5976.)