Weather A Factor, But Not Cause For Automatic Loss For Companies

CFO Mark Thresher tells NU that the company is taking a look at where the weather losses occurred and at the company's concentration of risk to determine if Nationwide should diversify to other regions. But he says there have been no decisions made on pricing or risk concentration as of yet. He emphasizes that the second quarter was unusual with respect to the weather events that caused high losses.

Thresher notes that second-quarter investments were solid and that non-weather-related claims experience improved.

For the first half of 2011, Nationwide reports net income of $219 million compared to $483 million a year ago, and operating income of $398 million compared to $759 million for the 2010 first half.

P&C direct-written premiums were essentially flat in the second quarter and first half at $3.77 billion and $7.36 billion, respectively, compared to $3.75 billion and $7.36 billion for the same time periods a year ago.

Nationwide says it saw a 10 percent increase in direct-channel premiums and 20 percent growth in affinity-channel premiums. Additionally, premiums in the company's commercial business—which consists of small "Main Street" risks—grew 4 percent compared to the 2010 first half. Thresher also says Scottsdale Insurance, Nationwide's excess-and-surplus lines business, is growing solidly.

He says lines that are still lagging with respect to written premiums are standard auto and homeowners. Premiums written were impacted by the company's completion of nonrenewals in certain areas, and he says Nationwide's standard-auto agency business is "building momentum, but not growing ahead of last year."

Progressive Corp., focused primarily on U.S. auto insurance, says it experienced $125 million in second-quarter catastrophe losses from spring storms, well over the $47 million in catastrophe losses for the 2010 second quarter.

Still, the insurer says its net income rose 16 percent in the quarter to $245.2 million as net-premiums written increased 3 percent.

During a conference call to discuss earnings, Glenn Renwick, president and CEO, says Progressive's advertising campaign, centered on its Snapshot product, is allowing Progressive to "own that space."

Snapshot is Progressive's pay-as-you-go telematics program. Renwick says Progressive has done some branding work and has a "couple of new ads that have yet to air."

The take-up rate for Snapshot in the direct channel is strong, and the agency-distribution channel is "starting to accept the concept and get certified." About 50 percent of agents are certified to use it.

Profitability for the product—loss ratios and targets—"seem to be in line with expectations," he adds.

Renwick says Progressive is seeing "significant return to growth" in Florida and New Jersey—two states with no-fault personal-injury-protection (PIP) auto-insurance systems.

In New York, another PIP state, Progressive does not "have the growth that we would love to enjoy there," Renwick continues. "We certainly have respect for GEICO in New York. They've got a great position there."

Global insurer Zurich Financial Services Group says it suffered $280 million in second-quarter catastrophes, including $200 million from U.S. storms, but the company increased its second-quarter net income, after tax, by 88 percent, or $621 million, to $1.33 billion.

In the 2011 first half, Zurich saw $780 million in catastrophe losses, compared to $200 million in the previous year's first half, but net income increased by 20 percent over that period to $1.97 billion.

The company says first-quarter catastrophes, including the March 11 earthquake and tsunami in Japan, flooding in Australia and the February earthquake in New Zealand, caused more than $500 million in losses.

Zurich says first-half results were helped by realized gains of $441 million before tax on the sale of shares in New China Life Insurance Co. Ltd.

Gross-written premium rose 5 percent in the first half to $18.88 billion. The company reports a general-insurance combined ratio of 99.3, up 1.3 points from 98 in the 2010 first-half.