SNL Financial reported recently that property/casualty industry fourth-quarter 2012 underwriting results, buffeted by losses from Superstorm Sandy, are on track to come in at the worst level for any year-end quarter since 2002.
The company based its assessment on an initial compilation of the underwriting losses for the full-year 2012 for more than 2,600 individual P/C filers, which SNL said totaled more than $13 billion. Subtracting $4.8 billion in the aggregate underwriting losses for the same companies for the first three quarters of 2012 leaves a fourth-quarter total underwriting loss of roughly $8.2 billion, SNL said.
In past years, fourth quarters have tended to produce better underwriting results than the more catastrophe-prone second and third quarters.
The industry suffered underwriting losses of $14.5 billion in fourth-quarter 2001 and $11.8 billion in fourth-quarter 2002, according to SNL. (Editor’s Note: The figures are slightly different from other reports. For example, the Insurance Services Office put the fourth-quarter 2001 underwriting loss at $15.5 billion and the 2002 fourth-quarter total at $12.5 billion in reports that ISO generated in the years following those fourth-quarter periods.)
SNL noted that its latest figures for fourth-quarter 2012 are based on individual P/C filers for which as-reported data for both the fiscal year and first three quarters of 2012 was available as of March 8. The figures include companies primarily engaged in specialties, such as mortgage and bond insurance.
SNL noted that in spite of the fourth-quarter disaster, the full-year 2012 total underwriting loss of $13 billion is still lower than a staggering $34.3 billion for the full-year 2011.
The full-year and fourth-quarter 2012 results are subject to change, perhaps materially, upon further SNL analysis and the receipt of data for the remaining active P/C filers.
Reporting on individual insurers, SNL said that State Farm Mutual Automobile Insurance Co. reported the largest full-year 2012 underwriting loss at $1.6 billion.
State Farm was one of at least five individual P/C filers to report underwriting losses in excess of $1 billion for the full year, joining a diverse set of companies that included Fireman’s Fund Insurance Co., CNA Financial Corp. unit Continental Casualty Co., Liberty Mutual Holding Co. Inc.’s Liberty Mutual Insurance Co. and MGIC Investment Corp.’s Mortgage Guaranty Insurance Corp., according to SNL.
No individual filer reported an underwriting profit of $1 billion or more, SNL said, explaining that an individual filer’s full-year results may not necessarily be indicative of group-level data.
Source: SNL Financial