F.M. Global Profit Up 176% For 2003
NU Online News Service, Feb. 23, 2:46 p.m. EST?FM Global, the commercial property insurer based in Johnston, R.I., reported that 2003 net income rose 176 percent over the previous year to $666 million, a gain of $422 million helped in part by strong client focus on loss prevention.
The company said the results were powered by strong investment results, good premium growth, client retention, reduced loss frequency, a policyholder surplus increase and its lowest combined ratio ever.
Pretax operating income, before realized investment gains and losses, increased to $998 million versus $524 million the prior year.
FM Global said in-force premium grew by 17.7 percent to $3.9 billion, of which a significant portion was attributable to new business. Policyholder surplus grew by almost 47 percent to $3.05 billion versus $2.08 billion in 2002. The company said it was a record for surplus balance.
The company's combined ratio was 66.4, which FM Global said had significantly exceeded its expectations.
FM Global 2003 net incurred losses were $1.13 billion versus $950 million the previous year. Loss ratios declined to 44.2 versus 52.4 due to fewer-than-expected natural hazard losses and by clients preventing losses through the use of risk assessment and improvement techniques. FM Global said its expense ratio continued a downward trend to 22.2 versus 25 in 2002.
Shivan Subramaniam, FM Global chairman and chief executive officer, said the 2003 results were remarkable, "considering that we were following the best year we had in our history. All aspects of our business performed well, and we improved our ability to provide stable underwriting capacity and global services at competitive prices to our mutual policyholders."
Mr. Subramaniam said that over the past two years, FM Global's losses have become less frequent and less severe. "This tangible improvement wouldn't have been possible without clients who believe in FM Global's philosophy that the majority of loss is preventable, take proactive measures to truly understand their hazards, and are financially and philosophically committed to reducing their exposure to risk."
FM Global during 2003 declared a $325 million membership credit to eligible policyholders against their renewal or anniversary premium in 2004.
Mr. Subramaniam said FM Global plans to increase its risk appetite selectively to provide eligible clients with improved and expanded coverage.
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