Analysis Highlights Sandy’s Impact on Underwriting Results

Financial information firm SNL Financial’s preliminary analysis of more than 2,600 individual P/C filer’s 2012 statutory data illustrates how big of an impact Superstorm Sandy had on the filers’ underwriting results.

SNL said on March 12 that one individual filer whose 2012 underwriting loss stood out – given its concentration in Sandy-impacted areas – was New Jersey Manufacturers Insurance Co. and its $306.2 million full-year loss. The company had an underwriting profit of $14.1 million for the first nine months of 2012, which suggests it had an underwriting loss of $320.4 million during the 2012 fourth quarter. Data for SNL’s initial analysis included only annual results – so the suggested fourth-quarter results reflect the differences between the numbers for the full year 2012 and the first three quarters.

Among all the individual filers, State Farm Mutual Automobile Insurance Co. reported $1.58 billion in underwriting loss for 2012 – it’s the largest underwriting loss among the individual filers for which 2012 datawas available as of March 8.

Data suggests $1.32 billion from that $1.58 billion underwriting loss was attributable to the fourth quarter. The combined underwriting loss of State Farm Mutual Auto and State Farm Fire & Casualty Co., excluding other, smaller State Farm companies, was $2.32 billion for 2012, of which $1.63 billion appeared attributable to the fourth quarter.

Other P/C filers to report 2012 underwriting losses of more than $1 billion were Fireman’s Fund Insurance Co., CNA Financial Corp.’s Continental Casualty Co. unit, Liberty Mutual Holding Co. Inc.’s Liberty Mutual Insurance Co. unit and MGIC Investment Corp.’s Mortgage Guaranty Insurance Corp. unit. (An individual filer’s full-year results may not necessarily be indicative of group-level data.)

SNL said that for the full-year 2012, the P/C industry’s overall net underwriting loss totaled more than $13 billion for the more than 2,600 individual P/C filers as of March 8. (Filers also included companies engaged in specialties such as mortgage and bond insurance.)

SNL said this same group of individual P/C filers together had an underwriting loss of roughly $4.8 billion during for the first three quarters of 2012 – which suggests a 2012 fourth-quarter aggregate underwriting loss of $8.2 billion.