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Insurance carriers Q2 2021 earnings call round-up

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This quarter, large insurers were heavily impacted by the increase in frequency and claims of auto accidents as well as catastrophe losses from changes in weather patterns across the country. In response, carriers have started to determine what the appropriate approach is to rate-setting: some insurers that plan on raising rates include Allstate, Progressive, Root Insurance, The Hanover and The Hartford.  

Despite the increased levels of weather-related catastrophes and risky driving patterns, insurers and policyholders have been taking this time to reevaluate their policies. According to A.M. Best, the P&C industry grew its net underwriting income by 28% in the first half of 2021 compared to the same period last year. Here are some key takeaways from large carriers’ earnings calls this quarter.

Allstate

Allstate’s combined ratio was still high despite the increase in the frequency of auto accidents and $952M in catastrophe losses, and stated that its auto property damage gross claim frequency this quarter was up 47% compared to the same period last year. Policy growth in the carrier’s direct and excluding agent channel were flat this quarter, due to lower customer retention reflecting pandemic-related customer support and the carrier plans to implement targeted price increases. Allstate announced its $270M takeover of SafeAuto this quarter as well.

Read the full earnings release.

Key Numbers

  • Combined ratio: 95.7, 5.9 point improvement compared to Q2 2020 
  • Net income: $1.15B ($3.79 per diluted share), up 41% compared to Q2 2020 
  • Catastrophe losses: $952M, down 19.7% compared to Q2 2020
  • Shelter-in-Place payback expense: $29M, down 96.1% compared to Q2 2020 
  • P&C written premiums: $10.3B, 12.5% increase from Q2 2020

Chubb

Chubb is one of two publicly traded personal lines insurers that saw improvement this quarter, with its combined ratio falling to 80.7 from 88.8 a year before. The insurer saw premiums spike by 21% in its global P&C business, and averaged double-digit commercial P&C growth over the past 10 quarters. Chubb has been trying to expand its market share this year by submitting multiple offers to buy The Hartford but was rejected. 

Read the full earnings release.

Key Numbers

  • Combined ratio: 80.7, a 8.1 point decrease compared to Q2 2020
  • Net income: $2.27B, compared to Q2 2020’s net loss of $331M 
  • Core earnings: $1.62B, compared to Q2 2020’s loss of $254M 
  • Catastrophe losses: $1.2B, a 27% increase from Q2 2020 
  • P&C written premiums: $8.4B, a 15.7% increase compared to Q2 2020

GEICO

The top auto insurer reported that its claims frequencies in the first half of 2021 were higher for property damage coverage by 11-12% and bodily injury by 13-14%. Collision and personal injury coverages were up 17-22% as well. GEICO premiums earned rose 5.6%, while claims and claims settlement costs rose nearly 36%.

Key Numbers

  • Combined ratio: 93.4, 16.2 point increase compared to Q2 2020 
  • Net income: $626B, 70% decrease compared to Q2 2020 
  • P&C written premiums: $9.23B, 14.1% increase from Q2 2020

The Hanover

The Hanover applied rate increases of 6.5% in core commercial lines and 2.8% in personal lines policies this quarter. The carrier was impacted by rain and flooding events in the Midwest in June, primarily in Michigan, where it holds 6.9% of personal lines market share.

Read the full earnings release.

Key Numbers

  • Combined ratio: 94.4, a 1.8 point improvement from Q2 2020 
  • Net income: $128.5M, an 11.5% increase compared to Q2 2020
  • Catastrophe losses: $76.8M due to events in the Midwest in June 
  • Net written premiums: $1.2B, an 11.6% increase from Q2 2020

The Hartford

The carrier’s combined ratio was better in Q2 2021 compared to the previous year due to lower COVID-19 incurred losses, higher earned premiums and lower catastrophe bonds. In addition, through June 30, The Hartford returned $933M to shareholders, consisting of $242M in common stockholder dividends paid.

Read the full earnings release.

Key Numbers

  • Combined ratio: 88.5, 8.4 point improvement compared to Q2 2020’s 96.9 
  • Net income: $900M ($2.51 per diluted share), 94% increase from Q2 2020 
  • Core earnings: $836M ($2.33 per diluted share), 91% increase from Q2 2020
  • COVID-19 losses: $3M, compared to $213M in Q2 2020
  • Core earnings return on investment: 13.1% 
  • P&C written premiums: $3.3B, 12% increase from Q2 2020

Liberty Mutual

Liberty Mutual’s Chairman stated that this quarter’s results benefited from continued strong performance within its investment portfolio which generated $1.4B of pre-tax net investment income, and stated that underwriting results were favorable across the business. The carrier’s announcement to purchase State Auto for $1B will make Liberty Mutual the second-largest writer in the independent agent channel. The carrier also proposed the acquisition of Malaysian insurer AmGeneral, which would advance the company’s strategy and presence in the Asia Market.

Read the full earnings release.

Key Numbers

  • Combined ratio: 98.1, a 7.1 point decrease compared to Q2 2020 
  • Net income: $769M, compared to Q2 2020’s net loss of $320M 
  • Catastrophe losses: $660M, a 24.8% decrease compared to Q2 2020
  • Net written premiums: $21.2B, 7.2% increase from Q2 2020 

Progressive

Progressive noted that as pandemic-related restrictions were significantly reduced during this period, both frequency and vehicle miles traveled increased and stated that the increase in personal auto severity reflects higher costs to both repair cars and for medical expenses. In response to the fall in underwriting profitability, the carrier started to scale back its advertising spend at the beginning of Q3 and is looking to hike rates in some states as it struggles with increased accident severity and frequency. Progressive also saw its share prices plunge in June after it reported an increase in car insurance claims (a 47% increase compared to Q2 2020), with prices dipping just over 1%.

Key Numbers

  • Combined ratio: 96.5, an 8.8 point increase compared to Q2 2020
  • Net income: $790.1M, a 56% decrease compared to Q2 2020
  • Catastrophe losses: $1.6B 
  • Net written premiums: $11.5B, a 13% increase compared to Q2 2020

Travelers

Travelers is one of two publicly traded personal lines insurers that saw improvement this quarter. The carrier is eyeing auto rate increases in some states as traffic volume and claims frequency increases, which would mark a course reversal for the company as it grapples with the surge in used car prices and total cost to repair in the auto sector, and the elevated frequency and severity of fire and non-weather water losses on the homeowners side. 

Read the full earnings release.

Key Numbers

  • Combined ratio: 99.7, a 1.6 point increase compared to Q2 2020 
  • Net income: $934M, compared to Q2 2020’s net loss of $40M
  • Core income: $879M ($3.45 per share) 
  • Catastrophe losses: $475M, compared to Q2 2020’s $854M 
  • Underwriting gains: $324M, compared to Q2 2020’s loss of $280M 
  • Net written premiums: $3.3B, 16% increase compared to Q2 2020
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