Although COVID-19 took a toll on a lot of businesses throughout the year, the last quarter of 2020 saw an increase in auto insurance shopping activity. For the fourth quarter, the auto insurance shopping rate averaged 4.7% and ended the year at 10.9% revealing that normal shopping patterns are returning. Here’s a round-up of large carriers’ Q4 2020 earnings calls and how they plan on shaping their business models for 2021.
Allstate Q4 2020
Allstate had a successful 2020, maintaining an overall 34 million Property-Liability policies, and achieving more customer access and improved its competitive price in auto insurance. Policies in force increased 21% to 176 million, with total growth and return prospects expecting to improve with the recent acquisition of National General. The carrier predicts that its protection services sector will continue to grow in revenue and profitability and attract and retain more customers throughout 2021.
- Q4 Net income: $2.6 billion ($5.87 per share)
- Q4 Combined ratio: 84
- Q4 Underwriting income: $1.42 billion
- 2020 Net income: $5.5 billion ($14.73 per share)
- 2020 Consolidated policies: 175.9 million, 20.5% increase from 2019
- 2020 Property-Liability policies: 1.5% decrease
- 2020 Protection Services policies: 136.3 billion, 28.6% increase from 2019
Chubb Q4 2020
In Q4, Chubb Global P&C premium revenue, excluding agriculture, grew 6%, with commercial lines growing over 11%. Chairman and Chief Executive Officer Evan G. Greenberg stating that the pricing environment of this quarter was the strongest it has seen since rates in certain classes began to rise about three years ago. He also stated that the pandemic’s effect on consumer activity is the reason for the net premium decline but thinks it will improve as 2021 progresses.
- Q4 per-share net income: $2.42 billion ($5.34 per share)
- Q4 core operating income: 39.5% increase ($3.18 per share)
- Q4 Consolidated net premiums: $8.41 billion
- Q4 Written global commercial P&C lines: 10% increase compared to Q4 2019
- Q4 Commercial P&C rates: 16.5% increase compared to Q4 2019
- Q4 Lost cost trends: 11.5% increase compared to Q4 2019
- 2020 Consolidated net premiums: $33.82 billion, up 4.8% compared to 2019
- 2020 Net income: $3.53 billion ($7.79 per share)
- 2020 P&C catastrophe losses: $296 million
Cincinnati Insurance Companies Q4 2020
For Cincinnati Insurance, the fourth quarter of 2020 improved the carrier’s full-year results. While the company saw an increase in catastrophic losses, it was still able to improve its quarterly combined ratio by 4.3 points compared with the fourth quarter of 2019. Cincinnati aims to look through the noise caused by catastrophes or inherent variability and focus on growth.
- Q4 Net income: $1.049 billion ($6.47 per share)
- Q4 Net writing premiums: 7% growth from 2019
- Q4 Underwriting profits: $119 million
- Q4 Combined ratio: 87.3
- 2020 Net income: $1.216 billion ($7.48 per share)
- 2020 Net written premiums: $519 million, 27% increase from 2019
- 2020 Combined ratio: 52.1
The Hartford Q4 2020
Hartford P&C business results were strong throughout 2020, with the small commercial sector delivering record new business from its Spectrum package offering for small businesses during the last four months and the middle and large commercial specialty sectors seeing significant positive pricing and underwriting discipline. In the personal lines sector, the carrier plans to release a new auto and home product in the first half of 2021 to improve results. The company also reported that its underwriting execution methods and expectations are strong for 2021.
- Q4 Net income: $532 million ($1.47 per share)
- Q4 Core earnings: $626 million, a 22% increase from Q4 2019
- Q4 Commercial lines combined ratio: 91.8
- Q4 Net loss: $41 million
- 2020 Net income: $1.7 billion ($4.76 per share), a 17% decrease compared to 2019
- 2020 Group life claims: $239 million
Liberty Mutual Q4 2020
Liberty Mutual faced several challenges in 2020, from economic conditions, the pandemic, increased awareness of systemic racial injustice and a rapidly evolving insurance risk landscape. The company ended the year strong, driven by favorable core underwriting results and strong investment performance. The carrier also suggests that it cannot predict future results because it depends on developments and actions around the severity of coronavirus and its impact on the community, but aims to grow in GRM, profitability in GRS and diligent expense management.
- Q4 Net income: $162 million
- Q4 Net written premiums: 10.095 million, a 3.5% increase from Q4 2019
- Q4 Combined ratio for net incurred losses: 101.9
- 2020 Net income: $768 million
- 2020 Consolidated net premiums: $40.6 million, a 2% increase from 2019
- 2020 Total combined ratio: 101.8
Root Q4 2020
Root, who went public in October, stated that the global pandemic not only disrupted the world economy, it also amplified the economic uncertainty of 2020, and stated that several dynamics resulted in the most volatile and unpredictable global economic environment in many decades. Root saw a $122 million loss in the last three months of 2020 and fell short by $ 56 million on revenue, but prefers to look at different metrics to determine their business success. The carrier plans on expanding to new states, developing new products and expanding its marketing channels and renewal rates in 2021.
- Q4 Direct earned premiums: $155 million
- Q4 Direct loss ratio: 76
- Q4 Direct accident period loss ratio: 82
- 2020 Revenues: $346 million
- 2020 Total auto policies: 322,759
- 2020 Direct written premiums: $617 million
- 2020 Direct loss ratio: 82, compared to 2019’s 99.9
Travelers Q4 2020
The Travelers Companies saw strong renewal rates in 2020 despite the circumstances, and actually reported a record renewal rate change in Business Insurance (8.4%) and Bond & Specialty Insurance (12%). The carrier reported strong retention and higher renewal rate changes despite COVID-19 and related economic conditions.
- Q4 Net income: $1.310 billion ($4.91 per share)
- Q4 Net written premiums: $7.269 billion, a 3% increase from Q4 2019
- Q4 Combined Ratio: 86.7
- 2020 Net income: $2.7 billion ($10.48 per share)
- 2020 Underwriting profit: $2 billion
- 2020 Combined ratio: 95.0%
- 2020 Net investment gains: $50 million
Progressive stated in their investor call that aside from the pandemic and natural disasters, 2020 was the second year in a row that the U.S. private passenger auto market as a whole delivered an underwriting profit. The carrier suggests that this was resulting from many competitors aggressively reacting to rate need in 2016-2018, and overall the company had a successful and profitable year.
- 2020 Profitability: 3.7 points
- 2020 Net written premiums: $33 billion, a 7% increase compared to 2019
- 2020 Personal lines premiums: $2 billion
- 2020 Combined ratio: 87.7
- 2020 Policies in force: 11% increase
State Farm 2020
State Farm saw growth in auto policies, but a drop in auto lines earned premiums for the second year in a row. The decrease reflected a focus on the return value to customers and overall lower rates due to the pandemic. In 2020, the company saw a decrease in customers driving and made changes in the claims experience based on changes in driving behaviors. State Farm also rolled out the Good Neighbor Program, where the company paid $2 billion in policyholder dividends to State Farm Mutual customers and provided premium relief for other customers. The carrier also paid out nearly $600 million in life insurance policyholders in 2020.
- 2020 Total revenue: $78.9 billion
- 2020 Net written premiums: $65.1 billion, compared to 2019’s $64.8 billion
- 2020 Combined underwriting gain: $1.9 billion, compared to 2019’s $777 million
- 2020 Net income: $3.7 billion, compared to 2019’s $5.6 billion
While most carriers reported positive results in Q4, the fourth quarter of 2020 also exposed the widening gap between the insured and uninsured shopped dropped 7.6% according to LexisNexis. As the pandemic has taken its toll on rates across the board and companies have had to reevaluate what sectors to focus on and grow, most carriers expect more stability as 2021 unfolds.