Eighty percent of the names on NU’s annual list of the Top100 P&C insurance groups (see facing page) saw an increase innet premiums written in 2011—and every dollar counted as the year’scatastrophe events shrunk insurers’ net incomes, and the combinedratio for the Top 100 climbed to 110.2 in 2011, compared to 102.6in 2010.

Of the 20 insurance groups that experienced a drop in netpremiums written in 2011, only five of those are ranked in the Top50.

On average, net premiums for the Top 100 groups increased 4percent, compared with an anemic 0.7 percent growth in net premiumswritten in 2010.

Arch Capital Group, moving up in the rankings to 73 in 2011 from120 in 2010, enjoyed the biggest year-over-year increase in netpremiums written (108.5 percent). Arch says its gross premiums areabout the same year-over-year, but the company’s net premiums aremuch higher due to a change in its reinsurance program.

QBE Insurance Group logged a 45.7 percent increase in netpremiums in 2011 compared to 2010, which places QBE in the Top 20for the first time.

The P&C industry continues to be dominated by a relativelysmall group of key players: The Top 5 insurance groups accountedfor just over 37 percent of net premiums written by the entirelist, and the Top 10 made up more than half (nearly 57 percent) ofthe Top 100’s net premiums.

The No. 1 group, State Farm, more than doubled the net premiumswritten by its closest competitor, Allstate.

Each of the Top 5 insurance groups recorded an increase in netpremiums (although Allstate’s was basically flat), but each alsosaw their combined ratio worsen.

American International Group’s Chartis, sitting in sixth place,saw its combined ratio improve 16.4 points to 112.3.

Two mortgage insurers actually bested AIG’s year-over-yearcombined-ratio improvement, but by no means were their overallfinancial results favorable. Radian Group Inc. experienced animprovement of 16.8 points in yearly combined ratio to 205.7—whichranks it second-worst among all Top 100 insurance groups. GenworthFinancial had the worst combined ratio for 2011, with 256—andthat’s an improvement by 20.5 points over results from the yearprior.

The 110.7 combined ratio for the Top 100 (which would be 3.6points lower excluding the mortgage insurers on the list) islargely due to widespread catastrophes throughout last year. Itseemed no area of the U.S. was spared as significant tornadoes,thunderstorms, snowstorms and wildfires, along with HurricaneIrene, generated an exceedingly high number of claims.

U.S. catastrophes in 2011 caused $33.6 billion in direct-insuredlosses to all insurers before reinsurance recoveries. That’s $19.3billion more than in 2010 and $17.5 billion more than the 20-yearaverage through 2011, according to an analysis by ISO, the PropertyCasualty Insurers Association of America (PCI) and the InsuranceInformation Institute (I.I.I.).

In 2011, the industry’s netincome was $19.15 billion, compared to $35.2 billion in 2010.

Just 17 insurance groups last year posted improvements in theircombined ratio—a key measure of losses and other underwritingexpenses per dollar of premium. And just under a quarter of thelist, 21 groups, saw recorded combined ratios below 100.

According to a special report by ratings agency A.M. Best Co.,poor industry performance in 2011 was additionally due to lowinvestment income, macroeconomic weakness and a decline infavorable reserve development.

In fact, leaving out AIG’s $4.1 billion bolstering of reservesfor its P&C unit Chartis in 2010, the dollar amount forfavorable reserve development throughout the industry in 2011,compared to the prior year, declined about $1.2 billion to $13.1billion, says A.M. Best—which excludes mortgage andfinancial-guaranty segments in its P&C report.

COMPANIES MAKE FAVORABLE SHOW FOR Q1 2012

Looking to our list of Top 100 companies for 2011 (see page 14),net premiums written increased about 4.3 percent year-over-year,but the combined ratio worsened to 106.2 from 99.2.

Also of note among the Top 100 companies: Four of the Top 40 sawdouble-digit premium growth, and those four are members of just twogroups—Zurich (Farmers and Mid-Century) and Berkshire Hathaway(GEICO Indemnity and National Indemnity). At each of those fourcompanies, however, combined ratios worsened.

But the news is getting better. A look at the Top 100 companies’first-quarter 2012 results (see page 22) shows a bounce back,primarily due to fewer cat losses.

For instance, Factory Mutual Insurance Co. (FMGlobal) recorded nearly $300 million in first-quarter net income,compared to a loss of about $14.9 million during the same period in2011.

Combined first-quarter net profit among the Top 100 companiesincreased about 45 percent year-over-year, and the combined ratiofor the group improved nearly six points to 97.5.

For the overall U.S. P&C industry, first-quarter net incomewas $10.1 billion, up from $7.8 billion during the first threemonths of 2011, according to a joint report from ISO, PCI andI.I.I.

The industry’s combined ratio improved during the first quarterto 99 from 103.3 the year prior—the best underwriting result sincethe industry posted a 91.6 combined ratio in Q1 2007.

Editor’s note: Last year’s Top 100 list was compiled usingHighline Data, which was a unit of NU’s parent company,Summit Business Media. Highline Data was acquired last year by SNLFinancial, which is the source for this year’s Top 100. Thisaccounts for slight discrepancies in the 2010 rankings and premiumamounts; for example, in our Top 100 list last year, Liberty Mutualplaced third, whereas SNL data ranked the group fourth.

See chart: TOP 100 GROUPS

See chart: TOP 100 COMPANIES

See chart: TOP 100: Leaders & Laggards

See chart: TOP 100 COMPANIES: Q1Comparisons

See chart: TOP GROUPS: By Line