Best’s Market Segment Report: U.S. Property/Casualty Mutual Insurers Achieve Moderate Surplus Growth Despite Elevated Losses
The Best’s Market Segment Report, “U.S. P/C Mutual Insurers: Moderate Surplus Growth Despite Elevated Losses,” states that surplus growth, an important performance metric for mutual companies, rose by nearly 6.0% during 2017, driven predominantly by
Net premiums written, which have grown every year since 2010, grew at a moderate pace of 4.4% in 2017. The premium increase is attributable to several lines of business for rated mutuals in 2017, particularly
private passenger automobile liability, automobile physical damage and commercial automobile liability, due mostly to aggressive rate actions industrywide to remedy the surge in automobile claims frequency. Severity is also a concern: Loss settlement costs have risen, given that new vehicles are extremely complex and costly to maintain and repair.
Overall, the rated property/casualty mutuals recorded a combined ratio of 106.6% in 2017, a 3.3-point deterioration from 2016, mainly due to an uptick in the pure loss ratio from hurricane and wildfire events. An elevated underwriting expense ratio continues to compress underwriting measures, although it declined slightly in 2017. Relatively high commission expenses still heavily influence the expense ratio, as is typical for companies such as mutuals that use independent agents.
Analysis of these
Competition remains heightened in this sector amid an insurance industry transformation due to technological advances and economic and demographic changes. Many larger carriers have addressed these market shifts by embracing innovation, but
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=278170.
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