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PIF growth bodes well for further Travelers private auto share gains

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PIF growth bodes well for further Travelers private auto share gains

CEO for personalinsurance Doreen Spadorcia said recently that the company continues to be "pleasedwith production results" in its agency auto and homeowners businesses, andfor good reason.

Agencyauto policies in force increased on a year-over-year basis for a fifth consecutivequarter, and the rise of nearly 9.5% during the first three months of 2015 was easilythe company's strongest result during that stretch. Agency homeowners and otherpolicies in force increased by 1.5% during the first quarter, which marked the secondconsecutive period of positive expansion in a metric that had long shown negativecomparisons.

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In bothlines, the outstanding policies in force remain well below the levels the businesseshad achieved. But Travelers appears poised to recapture at least a portion of themarket share it had lost in previous years.

Travelers'share of the U.S. private-passenger auto market as measured by direct premiums writtenfiled in combined annual statements had declined for four straight years through2014. Its homeowners business had experienced three consecutive years of decliningshare. A preliminary look at 2015 market-share statistics, based on SNL's propertyand casualty group consolidations, suggests that Travelers had arrested its slidein the U.S. private auto market with a modest increase, but continued to lose groundon a relative basis in the U.S. homeowners market as the top-line turnaround inthat business has lagged that in auto.

Spadorciadescribed the first-quarter production results in agency auto as "exceptional."Travelers reported agency auto policies in force of more than 2.21 millionin the first quarter, according to the company's financial supplement, up from 2.02 million in the year-earlierperiod and the highest amount it had posted for a quarter since the closing threemonths of 2012. New business volume of $215 million marked an increase from $174million in the first quarter of 2015.

In agencyhomeowners, she said, the company continued to "make good progress" froma production perspective.

"New business premium was up more than 30% from the prior-yearquarter, retention remains strong at 85%, and we added 26,000 policies during thequarter," she said.Policy count in the agency homeowners and other business of nearly 4.07 millionmarked an increase from 4.01 million in the first quarter of 2015.

Travelers' direct-to-consumer business remained a small, butgrowing, piece of the company's overall personal lines effort. The company reported134,000 direct auto and 120,000 direct homeowners and other policies in force inthat business in the first quarter, according to the financial supplement, up from104,000 and 99,000 in the year-earlier period. Combined net premiums written of$68 million compared favorably to $52 million in premium volume in the first quarterof 2015.

The company had attributed its resumption of growth in agencyauto policies in force during 2015 to the success of Quantum Auto 2.0, which Travelersbegan to roll out in 2013 in a bid to improve the competitiveness of its productsin the business line. It has, in turn, credited the momentum generated by the agencyauto business for having stimulated improved production in the agency homeownersarea.

Spadorcia said that Travelers is poised to introduce QuantumAuto 2.0 in California, North Carolina and Massachusetts in 2016. The effectivedate for the program in North Carolina was scheduled to have been Feb. 21, accordingto a Travelers Home and Marine InsuranceCo. form filing.All three states ranked among Travelers' 12 largest in 2015, based on private autodirect premiums written.

North Carolina and Massachusetts were two of the 11 states inwhich the group's private auto direct premiums written declined on a year-over-yearbasis in 2015. The group achieved its fastest rate of private auto direct premiumswritten growth during 2015 in Colorado, a state in which Travelers unit was scheduledto introduce Quantum Auto 2.0 inOctober 2013. Standard Fire's private auto direct premiums written inColorado soared to $51.3 million in 2015 from $25.7 million in 2014, $2.7 millionin 2013 and zero in 2012, as the overall group's in-market private auto businessvolume rose by 31.3% on a year-over-year basis.

"The company expects that its Quantum Auto 2.0 product …will continue to generate increased levels of new business premiums during the remainderof 2016 compared with the levels attained in the same period of 2015, although ata lower rate of increase than in recent periods," Travelers said in its for the first quarter in referenceto the agency auto business. It further projected that policies in force in theagency auto and homeowners businesses would increase in 2016.

Travelers'P&C subsidiaries combined to produce $3.38 billion in U.S. private auto directpremiums written in 2015, according to SNL's consolidation of disclosures made onthe state pages of their annual statutory statements, up 7.1% from the prior year.It marked the first time since 2011 in which the group's U.S. private auto directpremiums written had increased on a year-over-year basis, and it represented thefastest growth rate it had achieved in the business since the April 2004 mergerof the former St. Paul Cos. and Travelers Property Casualty Corp. The highest rateof U.S. private auto direct premiums written growth previously achieved by Travelersin its current form had been 4.4% in 2010.

The group'sU.S. homeowners direct premiums written declined in 2015 by approximately $334,000,or 0.01%, compared with rates of decline of 1.9% in 2014 and 2.4% in 2013. Whenviewed on a quarterly basis, reflecting disclosures on Part 1 of annual and quarterlystatements, year-over-year growth rates in the homeowners line turned positive forTravelers in the third quarter of 2015 following 12 consecutive quarters of negativecomparisons.