2010 Super Regional P/C Insurers

The original criteria and objective definition for Super Regional P/C Insurers™ was established in the Feb. 12, 2007 issue of Insurance Journal. Prior to the establishment of an industry-wide definition, a number of property/casualty insurers had referred to themselves as Super Regionals. Demotech Inc., the official research partner of Insurance Journal, examined the criteria, made changes to the composition of that criteria and updated the list of Super Regionals. To continue the discussion on the subject of what constitutes a Super Regional and to give definition to this important group of insurers, Demotech, a financial analysis firm based in Columbus, Ohio, analyzed year-end 2009 data. This data was utilized to classify and stratify the insurers reporting data to the National Association of Insurance Commissioners (NAIC).

Company Classification System

The experts at Demotech have refined their classification system for property/casualty insurance companies. The Demotech Company Classification System categorizes all property/casualty insurers into one of 11 categories based on an analysis of data reported by the companies to the NAIC.

The 11 categories that comprise the system are Nationals, Near Nationals, Super Regionals, Regionals, State Specialists, Coverage Specialists, Strategic Subsidiaries, Risk Retention Groups, Surplus Lines Carriers, Reinsurers and companies with less than $1 million in direct premium written.

A company cannot be assigned to more than one category. Therefore, a company not designated as a Super Regional is given another classification, perhaps Near National, Regional, or State Specialist.

Super Regional Criteria and Thresholds

To select the companies for the Super Regional Property/Casualty Insurers™ list, Demotech used these specific, objective qualifying criteria and thresholds:

• Active, individual companies not under regulatory supervision at Dec. 31, 2009;
• Reporting data to the National Association of Insurance Commissioners using the Property/Casualty annual statement format;
• At least $1 million of direct premium written in each of two to 34 states at Dec. 31, 2009;
• Less than 90 percent of Dec. 31, 2009, direct premium written in any one state;
• Less than 90 percent of Dec. 31, 2009, direct premium written in any one line of business;
• Policyholders surplus of at least $100 million at Dec. 31, 2009;
• Net premium written of at least $50 million at Dec. 31, 2009;
• Direct premium written of at least $25 million at Dec. 31, 2009.

In general, a Super Regional Property/Casualty Insurer™ is an individual company writing multiple lines of insurance in multiple states. Risk retention groups, surplus lines insurers and reinsurers are not eligible for the Super Regional category.

The 2010 Super Regional Property/Casualty Insurers™

Utilizing these quantitative criteria, Demotech identified 165 Super Regional Property/Casualty Insurers™ for 2010, based upon year-end 2009 annual statement data. They are presented in this exclusive Insurance Journal Special Report both alphabetically and by size as ranked by direct premium written as of Dec. 31, 2009.

Also included in this report are the 24 companies that are new to the Super Regional list, as well as 8 insurers that are no longer classified as Super Regionals, but have been reclassified into another one of Demotech’s categories based on year-end 2009 information.

“Super Regional insurers are critically important to the insurance industry and to their agents, producers and insureds,” said Joseph Petrelli, president, Demotech. “These companies are strong, stable markets that have been working hard for their agents and insureds. This is why Insurance Journal expressed interest in quantifying and identifying what criteria can be used to define an insurer as a Super Regional.”

Insurance Journal and Demotech want this year’s report to continue the discussion on the role of Super Regionals, as well as the definition and criteria used in determining the classification, so that future reports can continue to refine an industry definition of Super Regional Property/Casualty Insurers™.

“Insurers and interested readers are encouraged to examine the selection criteria and thresholds used to determine the list of 2010 Super Regionals. Our selection criteria are quantitative and transparent. We remain committed to setting benchmarks at levels that accurately categorize the industry,” comments Barry J Koestler II, CFA, senior financial analyst and chief ratings officer, Demotech.

The authors stress that this is an objective stratification of the companies that comprise the industry, not ratings of the individual insurers. Inclusion on the list of Super Regionals is not meant to suggest that a company is superior to companies not categorized as Super Regionals.

Future issues of Insurance Journal will report on other categories from the Demotech Company Classification System.

Since 1985, Demotech Inc. has been providing independent Financial Stability Ratings® of property/casualty insurers and title insurance underwriters. Its services also include consulting and financial analysis. For more information, visit www.demotech.com. Send suggestions or comments to Joseph Petrelli at jpetrelli@demotech.com or Andrew Simpson at asimpson@insurancejournal.com.