Fitch Ratings has published a new report that examines statutory financial performance for the US property/casualty insurance industry and 30 of the largest market participants on a statutory basis over the last 10 years.
Rating analysis benefits from a comparison of longer term performance for an individual insurer versus the industry and peers given the volatility in financial results over a 'normal' cycle. The most recent 10-year period 2002-2011 represented a nearly compete round trip through the market cycle with a hard market leading into several years of softening conditions that led to a very poor 2011.
The new report highlights insurers with an ability to consistently generate capital internally through operating activities demonstrating the success of an entity's underwriting, investing and risk management strategies.
Financial performance from 2002-2011 is analyzed using five unique measures that consider: underwriting performance, net profit margin, cash flow, returns on capital, and internal capital formation, providing rankings of five and 10 year average company performance under each individual measure and for the five measures combined.
The most successful underwriters tend to report solid results above peer averages in any market conditions, and many of the best insurers in this review are ranked similarly to their position in Fitch's last study in 2010. Chubb, Progressive, and W.R. Berkley reported the strongest performance over the past decade measured by a weighted average of five key ratios. Great American and Travelers were added to the list of top performers over the most recent five-year period.
In general, mutual insurers gravitated towards the weaker performing underwriters over the most recent five-year period given its reduced focus on high profitability and less levered balance sheets. Further, a handful of companies posted significant recoveries following successful restructuring efforts.
The report 'Property/Casualty Insurer Long Term Financial Performance' is available on the Fitch web site at www.fitchratings.com.
|
