Domestic insurance companies reported mixed third-quarter results, with State Auto taking a net loss, although a narrower loss than last year, while EMC Insurance Group and Safety Insurance Group reported higher net income.
Columbus, Ohio-based State Auto says it took a 2012 third-quarter net loss of $5.5 million, compared to a loss of $58.7 million a year ago. CEO Bob Restrepo attributed the loss primarily to a previously disclosed increase in reserves for prior periods due to adverse claims development in a commercial auto trucking program that the company canceled as April 1, 2012. State Auto increased its loss and loss expense reserves for prior periods by between $19.0 million and $21.0 million on program business written by its subsidiary, Risk Evaluation & Design LLC (RED).
State Auto says its third-quarter combined ratio was 110.2, compared to 122.4 a year ago.
Restrepo says, "Third-quarter results were helped by significantly better weather, continued improvements in our ex-catastrophe loss ratio performance for our personal, business and specialty insurance segments, and an improving pricing environment. These positive developments were offset by the previously announced reserve adjustment for the RED business now in run-off. Investment income is also down as interest rates and fixed income returns remain at historically low levels. While we're very disappointed in the RED performance, we have confidence that the actions we've taken will eliminate a drag on our financial performance."
Catastrophe losses, net of reinsurance recoveries, for the third quarter 2012 were $7.2 million, compared to $61 million a year ago.
Des Moines, Iowa-based EMC says its third-quarter net income was $8.3 million, reversing a $5.6 million net loss in 2011's third quarter. "A combination of improved pricing and more normal catastrophe losses resulted in the best third-quarter results we have reported in six years," says Bruce G. Kelley, president and CEO. "Rate level increases continue to accelerate in the commercial lines of business, and we continue to implement moderate rate increases in the personal lines of business."
Catastrophe losses dropped to $10.8 million in the quarter, compared to $23.4 million a year ago.
EMC took $6.8 million in losses associated with a crop reinsurance program in its reinsurance segment.
The company says it realized $8.3 million in favorable development on prior year reserves.
Boston-based Safety Insurance Group reports third-quarter net income of $14.3 million, up from $8.8 million in 2011's third quarter. The company saw higher net-earned premiums — $162.5 million compared to $151.3 million in last year's third quarter — and lower losses and loss-adjustment expenses — $106.4 million compared to $111.5 million a year ago.
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