25 Nov, 2024
Public US insurers report improved results in key business lines
Several public US insurers reported improved underwriting results within key personal line coverages through the first nine months of 2024.
Boosted premium rates on homeowners and private auto business supported performance, and insurers implemented stricter underwriting requirements and scaled back on writing new business in certain geographies in their search to return to profitability.
Berkshire Hathaway Inc.'s Geico Corp., The Progressive Corp. and The Allstate Corp. all reported increased advertising spending compared with the previous year in the nine months to Sept. 30, having trimmed spending in 2023. Progressive spent $2.8 billion on advertising through the first nine months of 2024, compared to $1.3 billion in the previous year. Allstate's ad spend was $1.20 billion in the first nine months of 2024, up $758 million from the prior year.
Private auto
US insurers have registered significant improvement in their private auto underwriting results since an historical poor 2022, although back-to-back hurricanes may threaten this recovery
All of the analyzed public companies that write private auto insurance reported a lower year-over-year combined ratio in the nine months to Sept. 30. At 10.5 percentage points, GEICO's improvement was the largest among the group. The combined ratio for the nation's third largest private auto insurer was 81.7% for the period, compared to 92.2% over the same period in 2023.
The Travelers Cos. Inc. private auto combined ratio was 95.3% in the nine months to Sept. 30, an improvement of 10.2 percentage points year over year. Excluding the impact of prior-year reserve development and catastrophe losses, Travelers' underlying combined ratio improved by 8.8 percentage points during the period, coming in at 93.7%.
The underlying combined ratio reveals overall trends in the business line that may be obscured by large one-time catastrophe losses and reserve development, which vary significantly between periods.
Travelers' private auto combined ratio for 2024 is expected to be 96.3%, according to analyst consensus estimates collected by S&P Global's Visible Alpha. The consensus projected combined ratio ticks up to 96.5% in 2025, a slight deterioration in results.
 |
– Read an article about State Farm's private auto results in third quarter of 2024. |
The New York-based insurer's in-force policy count is shrinking as it manages its auto profitability. Travelers had roughly 2% fewer auto policies on its book as of Sept. 30 compared to the same time in 2023, at 3,158,000. Net premiums earned during the 2024 third quarter were $2.08 billion, an 11.0% year-over-year increase.
Allstate's private auto combined ratio improved by 9.3 percentage points to 95.6% in the analyzed period. Progressive's private auto combined ratio was 87.7% for the nine-month period ended Sept. 30, 2024, compared to 96.3% a year earlier.
Homeowners
Homeowners insurers are contending with inflationary pressures, elevated number of severe convective storms and catastrophe losses.
Michael Klein, Travelers' vice president of personal insurance, said during its second-quarter earnings call that catastrophe losses were mainly from severe convective storms, which are "significantly exceeding long-term industry averages." It reported 28 designated catastrophe events, the highest ever for the period and 150% above the historical 10-year average, Klein added. Despite a challenging second quarter, the net impact to its combined ratio was muted as rate increases benefited its earned premiums.
Overall, the insurer's underwriting results improved within the business line in the nine months to Sept. 30. Travelers' combined ratio was down 13.8 percentage points to 103.1% for the period, and its year-to-date underlying ratio was 76.5%, compared to 85.4% over the same period in 2023.
Travelers maintains higher year-over-year net premiums earned growth on a shrinking in-force policy count. Earned premiums were $6.24 billion over the analyzed period versus $5.60 billion a year ago, and the insurer ended the period with roughly 6.1 million homeowners policies, down 3.8% from 2023.
Allstate also reported improved underwriting results within the business. The combined ratio of the second-largest US homeowners insurer was 97.5% during the analyzed period, compared to 122.8% a year ago. The insurer reported solid underlying results within the business line. Its underlying combined ratio during the analyzed period was 66.7%, compared to 69.1% in 2023.
A consensus of analysts expect Allstate's underlying combined ration for full year 2024 to be 64.3%.