The U.S. homeowners insurance industry's loss ratio improved markedly year over year in the third quarter, declining to 59.19% from 66.77%, while premiums grew 5.4% over the same period.
An S&P Global Market Intelligence analysis of quarterly filings shows that United Services Automobile Association, Travelers Cos. Inc., American Family Insurance Group, Progressive Corp. and Universal Insurance Holdings Inc. saw double-digit premium growth in the third quarter. USAA posted robust premium growth of 11.2% year over year, widening its lead as the third-largest homeowners insurer in the country over Liberty Mutual Insurance Co.
Progressive continues to be the growth leader in the homeowners segment, posting an 18.4% year-over-year increase in premiums.
Among the top 20 homeowners insurers, the company that saw its loss ratio improve the most was American International Group Inc. AIG recorded a loss ratio of 64.37% for the third quarter versus 177.29% a year ago. Its premiums, however, fell 4.8% year over year.
Universal Insurance's direct loss ratio touched 108.25% in the quarter. Its net loss ratio was up 18.8 percentage points year over year to 64.3% due to a decrease in financial benefits from claims management, unexpected weather events and business mix changes, among other things.
Moody's analyst Paulette Truman said trade tensions between the U.S. and China could result in another rise in materials costs and cut homeowners insurers' profitability. The cost of residential construction materials has climbed in the last two years, partly due to demand surge from significant catastrophes in years prior, the analyst said.
Moody's has a stable outlook for the U.S. personal lines space for the upcoming year.