SNL Financial Reports U.S. Insurance Market Shows Signs of Hardening; Bank of America & Berkshire Hathaway Named 2010’s Most Profitable Underwriters

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Fourth-quarter and full-year statutory insurance data shows increased premium growth, reserve deficiencies and deepening underwriting losses; all indicators of a forthcoming seller’s market and potentially bad news for consumers.

An SNL Financial analysis of preliminary fourth-quarter statutory insurance data finds signs that the prolonged P&C soft market is hardening, contrary to earlier reports from other insurance data providers.

An SNL Financial analysis of preliminary fourth-quarter statutory insurance data finds signs that the prolonged P&C soft market is hardening, contrary to earlier reports from other insurance data providers. U.S. property and casualty industry premiums grew at their fastest rate since 2006 in response to underwriting losses and unfavorable reserve development. This means buyers could see higher premiums and rate increases as 2011 continues, particularly in business lines that directly impact consumers like personal auto and homeowners insurance.

“Commercial lines insurers have been stuck in a prolonged soft market, but we are seeing an end to many of the factors enabling this trend. After analyzing data for 95% of the industry, SNL Financial found that the U.S. insurance industry’s negative returns on underwriting continue to deepen and the short-term boost from over-reserving for prior years is running out,” explained Jon Wright, SNL Financial’s Director of Insurance. “Overall premium growth continued to recover in 2010, and our findings point to further continuance of that trend in 2011.”

Based on key market indicators within the U.S. P&C industry, direct premiums written increased 2.9% and net premiums increased 4.0% from the same period in 2009. Underwriting losses totaled $2.4 billion, of which $750 million came from additions to reserves for prior years.

“We continue to see deterioration in profits for the P&C industry,” noted Tim Zawacki, Senior Industry Analyst at SNL Financial. “This is at least partially due to industry giant AIG, which continues to make headlines as it continues to pay for inadequate reserving over the last several years. What remains to be seen is whether AIG is acting first, and this trend is symptomatic of the entire commercial lines industry, or an isolated event.”

A combination of personal and commercial lines writers recorded strong underwriting profits in 2010. Bank of America Corp.'s Balboa Insurance Co., the force-placed homeowners’ writer in the midst of a sale to QBE Insurance Group Ltd., generated a net underwriting gain of $937 million.

Berkshire Hathaway Inc. units Government Employees Insurance Co. and National Indemnity Co. posted underwriting profits of $699 million and $650 million, respectively, as shown in SNL Financial’s Top 5 U.S. Insurers by Underwriting Profit 2010Y chart.

Top 5 U.S. Insurers by Underwriting Profit 2010Y
Company -- Group -- 2010Y Net Underwriting Profit ($000)
Balboa Insurance Company -- Bank of America -- 936,741
Government Employees Insurance Company -- Berkshire Hathaway -- 699,201
National Indemnity Company -- Berkshire Hathaway -- 650,094
United Services Automobile Association -- USAA -- 564,095
Federal Insurance Company -- Chubb -- 563,405

For in-depth information on SNL Financial’s coverage of 2010 P&C individual insurance entity performance, contact Christina Twomey by email at ctwomey(at)snl(dot)com or phone 434-951-6914. High resolution charts are also available for reprinting to media.

SNL’s statutory data includes detailed financial data on each filer, reinsurance, investment and loss reserve schedules, data by state and line of business and hundreds of ratios, snapshots and analytics, available exclusively as part of SNL Unlimited service for Financial Institutions. SNL is the only information provider to offer clients a comprehensive insurance product, linking statutory data with public company data, mergers & acquisitions data, proprietary news, documents and more. To find out more about SNL Unlimited, contact sales(at)snl(dot)com or call +1.866.296.3743.

About SNL Financial
SNL Financial is a leading provider of financial information on more than 3,300 public companies and 50,000 private companies in the business sectors critical to the global economy: Banking, Financial Services, Insurance, Real Estate, Energy and Media & Communications. The SNL information service integrates breaking news, comprehensive data and expert analysis into an electronic database available online and updated around the clock. For more information, visit

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