The outlook for the U.S. homeowners market has improved over last year thanks in part to rate increases and lower reinsurance costs, according to reinsurance intermediary Aon Benfield. This new report by Aon Benfield Analytics reveals that insurers’ expected after-tax return-on-equity (ROE) for U.S. homeowners insurance business is 8.6 percent on a countrywide average, and 12.6 percent excluding the state of Florida, both of which are a 70 basis point improvement over last year. Aon identifies 36 states where the expected return will exceed 10 percent, enabling carriers to cover their cost of capital. It also identifies states that pose a challenge to home insurers.
In addition to a map showing prospective ROE by state, the report includes maps on 10-year and 5-year loss experience by state and the combined ratios needed in each state to achieve a 10 percent return on allocated capital, as well as rate changes and premium growth.