A comparison of the returns on equity of national and regional writers of property/casualty insurance produces a result that may not seem terribly intriguing: National writers win, hands down.

Executive Summary

Analysts from Assured Research compare the returns on equity of national and regional writers of property/casualty insurance. National writers win, with higher and slightly less volatile ROEs over the last five years. Here, the analysts shed light on the major drivers of differences between the two types of insurers.

But what drives returns that are higher for nationals at every quintile we measured? And lower volatility to boot?

And what are some of the financial bright spots for regional writers?

Updating an analysis of statutory data that we developed for Carrier Management in 2014, we still find that regional writers are growing faster than their national counterparts—5.7 percent vs. 3.4 percent premium CAGR over the past five years—but the underwriting margin of regional insurers has been about 200 basis points (bp) worse than their national counterparts for each of the five years from 2012 to 2016.

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