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Homeowners industry sees YOY growth in direct premiums written in '15

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Homeowners industry sees YOY growth in direct premiums written in '15

Directpremiums written growth slowed in the homeowners business in 2015 compared withpast years, but the industry recorded a third consecutive year of favorable underwritingresults in the line.

Directwritten premiums for the industry grew 3.17% year over year in 2015 to $88.72 billion.The top 20 homeowners insurers by market share saw direct written premiums grow2.74% to $64.07 billion. The net combined ratio for the homeowners line for 2015was 91.35%, down from 92.84% a yearago as the net loss ratio fell to 52.90% from 53.43%.

Catastrophesin the U.S. in 2015 caused $16.10 billion in insured losses, compared with $15.3billion in 2014, according to a Munich Re presentation.Severe thunderstorms caused losses of $9.6 billion. Winter storms and cold weathercaused $3.50 billion in insured losses in 2015, almost double the 10-year averageof $1.8 billion. Several homeowners insurers reported that they incurred significantweather losses related to the winter weather in the Northeast. Wildfires, heat wavesand drought produced $1.90 billion in insured losses in 2015, below the 10-yearaverage of $2.8 billion.

Meanwhile,the rankings of the top 10 companies by market share in the homeowners insuranceindustry remained unchanged year over year in 2015, with State Farm Mutual Automobile Insurance Co. holding on tothe top spot with its 19.74% market share.

The StateFarm group reported an underwritingloss of $2.1 billion across business lines in 2015, but strong homeownersprofitability provided a partial offset to a reported underwriting loss of $4.4billion attributable to the auto business. The company's sale of its Canadian business to Desjardins Group also impacted year-over-year growth rates in direct premiums written.In the homeowners business, direct premiums written fell about 0.7% in 2015 to $17.52billion from $17.63 billion in 2014 but rose 1.7% when excluding Canada.

maintained its No.2 position with an 8.94% market share on $7.93 billion of direct premiums written,while Liberty Mutual Group Inc.was third with a 6.76% market share on $5.99 billion of direct premiums written.

Pat Macellaro,Allstate's vice president of investor relations, said at a March 8 conference thatthe company started to reposition the Allstate brand homeowners business in 2008to reflect an increase in severe weather and has executed a "multifaceted localmarket approach" during the past seven years.

Accordingto a transcript of Macellaro'sremarks, the company re-underwrote its existing book of business, establishing tighternew business underwriting standards and migrating customers to higher deductiblelevels while reducing the number of homes insured. Macellaro said the company alsocreated a new homeowners product, House and Home, which gives customers a chanceto choose between roof coverage levels.

In additionto no longer ranking asFlorida's largest personal and commercial residential property insurer by policiesin force on an individual basis, CitizensProperty Insurance Corp. also dropped out of the list of top 20 homeownersinsurers by market share in 2015. Citizens Property wrote$503.9 million direct homeowners premiums in 2015, a 36.61% year-over-year drop.

DougElliot, president of The Hartford FinancialServices Group Inc., which holds a market share of 1.31%, said in thecompany's fourth-quarter 2015 earnings call that the company saw its combined ratiodecline year over year mainly due to higher auto loss costs and increased nonweatherlosses in the homeowners business. According to a transcript, Elliot also said the company is working to improvethe margins of its homeowners products and is investing in capabilities to betterharness data and analytics to refine and manage underwriting and pricing.

, COUNTRYFinancial and Amica Mutual InsuranceCo. saw the highest incurred loss ratios among the top 20 homeownersinsurers by market share.

In aregulatory filing, CSAAsaid the number and severity of catastrophe loss activity in 2015 increased significantlyover 2014. The Valley Fire and the Butte Fire, both in California, together addedabout $150 million to the company's total cat losses of $251.5 million for 2015,compared with cat losses of $71.7 million for 2014.

COUNTRYFinancial said in a recent filingthat results for 2015 were negatively impacted by first-quarter snowstorms in theNortheast, causing ice dams and freezing.

AmicaMutual stated in a regulatory filingthat home losses for the company increased by $204.9 million to $475.4 million in2015 due to an increase in the frequency of home claims and a higher number of policiesin force. Home cat losses for 2015 totaled $244.4 million, an increase of $183.2million over 2014. Most of the cat losses for the year were winter related, mainlystemming from freeze claims in Massachusetts, Rhode Island, Connecticut and NewYork, and wind and hail storm events in Texas and the Southeast.

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