No Sign Of Profit Demise In First Half
As property-casualty insurers tuned into The Weather Channel, worried that storms might drown their profit pictures, NU's data wizards compiled an early snapshot of first-half 2004 results and found profits almost everywhere.
According to preliminary data compiled by National Underwriter Insurance Data Services, the industry's combined ratio was 94.6 for first-half 20045.6 points better than the combined ratio reported for full-year 2003.
The story was even better for 41 of the top 50 insurers (based on net premiums written through six months), as combined ratios improved from first-half 2003 levels. Only seven of 50 reported combined ratios above breakeven, with Minnesota-based St. Paul Travelers' reserve charge producing the worst result of the group.
Recovering from a first-quarter 2003 reserve charge, companies in the Hartford Fire & Casualty Group showed the greatest improvement, while reinsurers like Munich's American Reinsurance and Berkshire's General Reinsurance reported worse year-to-date combined ratios than in 2003.
Berkshire's National Indemnity and commercial property specialist Factory Mutual reported the best first-half combined ratios among the top 50. Cincinnati Insurance Company was the only other commercial insurer in an elite 15-member group with combined ratios under 90. (NU classified commercial lines insurers as those with 55 percent or more of their 2003 net written in commercial lines, defining personal writers similarly.)
Industrywide six-month premium growth slowed to 4.7 percent, compared to a full-year growth figure of 9.4 percent in 2003. For the top-50 list, first-half growth was better at 8.6 percent but also fell below the 12.7 percent full-year growth figure reported for the same group in 2003. By segment, premium growth for those top-50 insurers breaks down as follows:
For 21 personal lines insurers as a group, premiums grew 7.6 percent in first-half 20046.2 percent in the first quarter and 9.1 percent in the second quarter. In 2003, premiums rose 9.8 percent over 2002 levels for this group.
For 17 commercial lines insurers, premiums grew 10.3 percent in first-half 2004. In 2003, their premiums jumped 18.0 percent.
For eight reinsurers as a group, the premium growth level fell to single digits, coming in at 7.0 percent for first-half 2004 (7.6 percent in the first quarter). In 2003, these same reinsurers saw their premiums climb 15.2 percent.
First-half net income for the top 50 companies nearly doubled to $14.7 billion from $7.5 billion, while industrywide net income grew 55 percent to $24.0 billion in first-half 2004.
Reproduced from National Underwriter Edition, September 9, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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