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Hurricanes, claims severity hit GEICO's private auto business in Q3'17

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Hurricanes, claims severity hit GEICO's private auto business in Q3'17

GEICO Corp. reported the highest loss ratio for any quarter going back to 2001 on its private auto line of business, according to an S&P Global Market Intelligence analysis.

The nation's second-largest auto insurer reported a loss ratio of 82.41% for the third quarter, compared with 74.30% in the year-earlier period. Losses jumped in the third quarter due to higher average claims severity and hurricanes. GEICO estimated $500 million in losses related to hurricanes Harvey and Irma.

Besides GEICO, only the group led by United Services Automobile Association among the top 10 auto insurers reported a private auto loss ratio higher than 80% for the quarter. But the Texas-domiciled P&C insurer's direct incurred loss ratio improved to 82.64% from 89.02% year over year.

On the other end of the spectrum, Allstate Corp. reported the lowest loss ratio among the top 30 auto insurers. The company's third-quarter direct incurred loss ratio dropped to 61.04% from 65.34% year over year. Allstate Chairman and CEO Thomas Wilson said on a recent earnings call that profit improvement actions the company initiated in 2015 and lower frequency of auto accidents led to improved profitability during the quarter, according to a transcript.

Meanwhile, Allstate's direct written premiums increased 2.48% year over year, the lowest increase among the top five auto insurers.

In terms of direct premiums written growth, four of the top 10 auto insurers registered growth of more than 10%. The private auto premiums of Progressive Corp. and GEICO grew at 18.11% and 16.48%, respectively. However, National General Holdings Corp.'s premiums grew the most among the top 30 auto insurers, at 26.02% from the previous year quarter. This allowed the specialty personal lines insurer to jump four places to the No. 14 spot in the rankings.

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S&P Global Market Intelligence offers a variety of tools to analyze underwriting performance of insurance companies. Click here for a template to review quarterly underwriting information for insurance companies.

Quarterly underwriting information by line of business is available in Parts 1 and 2 of the NAIC quarterly statements filed by U.S. insurance subsidiaries. This information is also available in the U.S. Insurance Statutory Financials database in the Screener tool.