US property/casualty insurers that focus on hard-to-place risks are distancing themselves from their peers in key metrics measuring revenue, underwriting profitability, balance sheet growth and other indicators of success, according to S&P Global Market Intelligence.
Kinsale Insurance Co., the Richmond, Va.-based primary operating subsidiary of Kinsale Capital Group Inc., ranked as the top performing US property/casualty insurer, said the S&P Global Market Intelligence rankings, an inaugural annual report that evaluates the performance of the top 100 net written premium writers in the US over the past year.
The report says four of the eight top performers specialize in the excess-and-surplus lines (E&S) business: Kinsale Insurance, RLI Corp., WR Berkley Corp. and James River Group Ltd.
Kinsale writes a diverse mix of casualty, property and professional lines of business focused on small and medium-sized business customers. “Kinsale leads a list dominated by commercial lines underwriters in a result that reflects the most favorable underwriting performance delivered by the industry segment in 2022,” the report said. (See related chart).
“The combination of US commercial lines of 94.4% for the calendar year is the best result since 2015, with profit in casualty lines, which accounts for a large majority of premium value in Kinsale, leading,” continued the S&P report.
“Specialty commercial insurers RLI Corp. and Great American Insurance (the name American Financial Group Inc. uses to conduct business) placed second and third, respectively,” the report said.
“Excess-and-surplus lines insurers, which focus on niche markets that require specialized underwriting skills and risk appetite, continue to grow rapidly as they supply urgently needed property insurance capacity in coastal regions and remain the leading providers of liability coverage for a wide variety of unique risks,” said Tim Zawacki, principal research analyst at S&P Global Market Intelligence, in a statement on a Global Market Intelligence statement.
“The US Property and Casualty Insurance Performance Rankings, which give many leading E&S carriers top marks for growth and profitability, suggest that public and private investors have ‘new enthusiasm for this well-established business model,'” he added.
Personal Lines
The effects of inflation and natural disasters have created one of the toughest environments in more than two decades for carriers focused on personal auto and homeowners insurance businesses, according to the report’s section covering personal lines, which “recognizes those select carriers that have been able to defy exceptional odds.”
“Progressive Corp., placed as one of only three personal lines focused entities in the top 50, outperformed peers in one of the most challenging operating environments in more than a generation in its core private-passenger auto business,” the report said, highlighting that the industry’s personal lines combined ratio of 109.9% was the highest since 20001 ratio above.
The progressive No. 1 among 32 personal line focused entities analyzed in terms of return-on-statutory equity and No. 2 of return-on-average assets. Its operating ratio ranks third among companies focused on the personal line. Progressive also led its personal lines partner in asset growth and placed second in excess growth.
“In a year where the private auto ratio exceeded 112% for possibly the first time since the 1980s industry-wide, Progressive rose to the No. 2 position in terms of the private auto market share while at the same time outperforming most of its competitors from an underwriting profitability perspective. While Progressive’s GAAP combined ratio exceeded the 96% benchmark in managing both private auto channels, its statutory performance relative to personal lines in peers on the key profitability metrics we selected,” the report said.
The second and third place personal lines writers American National Group Inc. and the group led by Arbella Mutual Insurance Co. Inc. shows top-quartile performance among personal lines focused on carriers from rates of return point point, and places them in the top five of the two metrics we use to measure relative underwriting profitability.
American National, a multiline carrier with business spanning personal and commercial P/C as well as life and annuities, has become a subsidiary of Brookfield Reinsurance Ltd. in 2022. “It produced leading results among personal lines focused companies in underwriting profitability and balance sheet growth metrics. With our rankings of personal lines focused on carriers based on the relative success of the entire P&C group, American National’s diversification paid off in 2022 as its loss expense ratio and loss adjustment in commercial lines was 13.8 percentage points lower than in personal lines,” the report said.
On the other hand, the report says, Arbella Mutual’s comparative lack of diversification in personal and commercial lines makes its “presence on the personal lines podium particularly noteworthy.”
Arbella’s geographic concentration in the New England region helped account for its outperformance, S&P explained. “The loss of group home owners and the LAE ratio of 48.3% is 28.9 percentage points better than the industry, in general, excluding state funds and other remaining markets in a year natural disaster activity is the most important in other parts of the country, especially the upper Midwest and Florida.
Other top-performing personal lines insurers in the S&P Global Market Intelligence analysis include CSAA Insurance Exchange; The parent of GEICO Corp. Berkshire Hathaway Inc.; County Financial, the group led by New Jersey Manufacturers Insurance Co.; Liberty Mutual Holding Co. Inc.; Farmers Insurance Group of Cos., and Michigan Farm Bureau Financial Corp.
procedures
The US Property and Casualty Insurance Performance Rankings are based on statutory financial results collected and compiled by S&P Global Market Intelligence. They are determined using 13 financial metrics from 2022 statutory filings grouped into six buckets: rates of return, underwriting profitability, balance sheet expansion, investment performance, prior-accident-year reserve development and premium growth.
The categories are given different weights to calculate performance scores for each of the 100 largest P&C entities in the US based on written net premiums in 2022. The same calculations are used to rank the largest entities determined by S&P Global Market Intelligence with commercial and personal line-oriented operations. This breakout is intended to recognize standout performances by carriers operating in market segments where overall financial results face significant macroeconomic headwinds.
More details on the S&P Global Market Intelligence US Property and Casualty Insurance Performance Rankings can be found here.
Topics
Carriers USA Excess Surplus Property Casualty
