Personal Lines Has Least Volatile Earnings
By Mark E. Ruquet
NU Online News Service, May 15, 10:30 a.m. EDT?An ongoing study released by Aon Corp. finds that personal lines coverages had the least volatile earnings history of all lines of insurance over the past five years.
The Chicago-based broker and its subsidiary, Aon Re Inc., released its annual report on publicly owned insurance company earnings volatility based on their earnings per share, said Paul Schultz, senior vice president with Aon Re, in a telephone interview.
Mr. Schultz said the report is aimed at providing an analysis that is not found through investment houses by comparing insurance companies and product lines against one another. He said it was not an examination of the quality of the numbers the companies reported.
Aon said it examined 50 companies for its report. The report was first produced for the firm's clients beginning in 2000, and was released for the first time publicly last year.
Over the past five years, ending in 2002, personal lines have consistently produced the least volatile earnings results. Reinsurance has been the most volatile over the same period, the report said.
Of insurers in personal lines, for a one- and five-year period, Erie Insurance Group of Erie, Pa., was found to have the least volatile earnings. ALFA of Montgomery, Ala., was number one during the two and three-year period.
In commercial lines, SAFECO of Seattle was rated least volatile for 2002. Old Republic of Chicago was least volatile over the past two years. AIG, based in New York City, was found as least volatile over the last three and five-year period.
RLI, based in Peoria, Ill., was the least volatile in specialty lines over the one, two, three and five-year periods.
In reinsurance, Bermuda-based RenaissanceRe was the least volatile in years one, three and five, while PMA Capital in Philadelphia was least volatile during the past two years.
Michael Bungert, president and chief executive officer of Aon Re, said in a statement that Aon was looking to recognize companies that have lead their sectors in the face of the erosion of capital and the increased frequency of rating agency downgrades caused by rising claims and legacy issues.
Bryon Ehrhart, president of Aon Re, added in a statement, "We believe that less volatile earnings do contribute over time to increased shareholder value."
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.