NU Online News Service, May 4, 11:22 a.m. EST
In reporting relatively flat first quarter income of $12.7 million, State Auto Financial Corp. says higher levels of catastrophes and large liability losses offset strong personal auto results and improvements in property lines.
In a conference call to talk about the earnings, Chief Executive Officer Robert P. Restrepo Jr. says $16 million in catastrophe losses during the first quarter added 4.6 points to the total 69.3 loss ratio. Excluding catastrophes the combined ratio last quarter was 98.4 versus 96.4 last year during the same time. The increase was driven by large liability losses that added 3.5 points.
Columbus, Ohio-based State Auto's "more aggressive file management system" has hurt results in the short term – especially in bodily injury and commercial liability – but, over time, Restrepo says the system will reduce indemnity payouts and commercial liability.
The insurer continues to get price increases for auto and homeowners insurance policies.
"Virtually all out homeowners growth came from price increases and we already have another double-digit price increase in the works for this year," Restrepo says. "By the end of 2012 we'll have increased prices by close to 30 percent since the beginning of 2009."
Looking ahead, but without giving an estimate, Restrepo says losses from storms that battered the South in the month of April "will exceed, possibly by good measure, what we normally experience in the second quarter for both catastrophes and non-catastrophe weather-related claims." Before this year the company's five-year average catastrophe loss was about $50 million.
"Whatever estimate we come up with, we'll exceed that amount," he adds.
HCC INSURANCE HOLDINGS INC.
The specialty insurance group said its net income for the first quarter was $47 million compared with $71.4 million a year ago during the same time.
The Houston-based insurer said it recorded $51.5 million in pretax losses from first quarter catastrophes in Japan, New Zealand, and Australia.
Additionally, the group was impacted by a $3.1 million out-of-period correction related to other-than-temporary impairments, HCC says.
The first quarter combined ratio was 94.7 compared with 89.9 a year ago.
AMERICAN FINANCIAL GROUP
The Cincinnati-based specialty commercial insurer posted 2011 first quarter net income of $83 million, a 22 percent drop when compared to $106 million a year ago at the same time.
American Financial says "record results" in its annuity and supplemental insurance segment was offset by a drop in specialty insurance underwriting profit.
The specialty casualty segment posted an underwriting profit of $2 million in the first quarter compared with $18 million in 2010 during the same quarter. Reduced profits were driven by a $19 million decrease in favorable reserve development, American Financial says.
The annuity and supplemental group made 18 percent more – for a total $52 million – than it did during the 2010 first quarter.
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