National Underwriter - November 21, 2011

DATA DIVE
TRUST IN AGENTS
AND CARRIERS
AGENTS TRUSTED...

97%
more than health care cos.

295%
more than stockbrokers
INSURANCE CARRIERS
TRUSTED...
25%

66%
more than health care cos.
150%
more than stockbrokers

Source: The Hanover Group, based on online interviews of 501 small-business owners

E SMALL-BUSINESS entrepreneurs have more trust in independent agents and their commercial-insurance carriers than any other financial-services business, according to a survey sponsored by The Hanover Insurance Group.

Sign of Worsening
Return on Equity
in 2012 and Beyond?

Allstate Insurance Group 13.0% State Farm Group 11.8% Berkshire Hathaway Insurance Group

10.0%

Liberty Mutual Insurance Group Travelers Group 6.1%

*ISO’s PCS says insured losses will reach the $25 million threshold to declare the event a catastrophe in these states.

Source: SNL Financial

E THE FREAK OCTOBER snowstorm that dumped more than two feet of snow in some locations is expected to be a major capital or credit event for the P&C insurance industry, said rating agency Moody’s Investors Service. Moody’s said the storm is expected to adversely affect earnings “during a year of unprecedented catastrophe losses.”

101.3

OVERALL COMBINED RATIO

95.2
93.3
93.5

UNDERLYING
COMBINED RATIO*

*Excludes catastrophes and reserve releases
Source: Company reports and KBW Insurance Research
3Q
2011
3Q

2010

E THE GOOD NEWS for carriers is P&C pricing appears to be on the rise. The bad news is data analyzed by Keefe, Bruyette and Woods continues to point to worsening returns on equity and earnings per share.

Auto-Da-Fé: 2011 Third-Quarter Earnings (Losses)
-In Millions-

E AUTO INSURERS REPORT losses in third-quarter net income, due mainly to various weather-related losses.

*specialty providers Source: Company results

2011 2010

( 6. 7) 0.89

( 3. 8) 96.8

6.1 30. 8

8. 8 15. 4

60.4 93.1

43.7 51.0

9. 8 15.0

5. 8 7.2

United Fire & Casualty Mercury General Corp.

Infinity P&C Corp.

Safety Insurance Group HCC Insurance Holdings*

ProAssurance Corp.*

Meadowbrook Insurance Group*

American Safety Holdings*

Aviation Insurance
Net Premium
(Hull and Liability)

in millions

2010 Net Premium

2011 Net
Premium
Premium
Change
Jan. $16.08 $17.43 8. 4

Feb. $3.98 $5.19 30. 4

March $9.65 $11.18 15. 8

Q1 $29.71 $33.79 13.7

April $128.53 $123.37 - 4

May $71.74 $71.92 0.3

June $41.35 $44.77 8. 3

Q2 $241.62 $240.06 -0.6

July $235.19 $228.61 -2.8

Aug. $40.03 $44.19 10. 4

Sept. $31.59 $31.44 -0.5

Q3 $306.8 $304.24 -0.8

Oct. $122.12 $113.39 - 7.1 2011 Total (to date)

$700.25 $691.49 -1.3

Source: Willis

E WILLIS’ LATEST REPORT on the aviation-insurance industry shows that average fleet value has grown by 8 percent and passenger numbers have increased by 16 percent, but premiums are down by 1 percent.