In our pursuit of providing the most comprehensive and timely information on the Massachusetts insurance industry, the following is a rundown of Third Quarter results from some of the leading insurers in Massachusetts that are required by law to issue quarterly results.
Please note, the information has been taken directly from press releases and or shareholder materials. If there is an insurer that you would like added to the list, please let us know…
For the number one insurance in the Commonwealth, MAPFRE saw a rise in its Insurance Unit’s premium globally during the third quarter of 2017, with premium rising to 14.8 billion euros, representing a 6.3% increase as compared to the same time period last year.
With respect to the insurer’s North American Regional Area, however, MAPFRE noted that record premium volume for Q3 2017 was almost 2 billion euros, approximately 1.2 percent lower than in Q3 2016. More specifically, the insurer had this to report on its operations within the United States and Puerto Rico:
- In the U.S., premiums slipped 0.1 percent to 1.7 billion, as a consequence of the cancellation of loss-making business outside Massachusetts, with the objective of improving profitability in those states.
- In Puerto Rico, premiums were down 8 percent to 260 million. This decrease also comes on the back of the non-renewal of loss-making business and a significant reduction in sales activity in September, as a consequence of the hurricanes that hit the country.
On the heels of this announcement, MAPFRE announced an ambitious reorganization and realignment plan. For those interested in learning the details, please refer to Agency Checklists, December 5, 2017 article, “Major Reorganization For MAPFRE USA With A Renewed Focus on Massachusetts.”
While net income for the third quarter of 2017 was down as compared to the third quarter 2016 , as well as for the nine months ending September 30, 2017, direct written premiums for the quarter increased. The following are some of the the salient numbers Safety Insurance cited in its latest quarterly report:
- Q3 net income was $18.0 million, or $1.18 per diluted share. A decrease of $600,000 from Q3 net income in 2016, which was $18.6 million, or $1.23 per diluted share.
- For direct written premiums, this number increased by $2.7 million or 1.3% during Q3. Specifically direct written premiums were $215.9 million in 2017 as compared to $213.2 million in 2016, during the same time period.
- With regards to loss, expense, and combined ratios, Safety announced that for Q3 they were 63.3%, 32.2%, and 95.5%, respectively. As for nine month figures, they were 63.9%, 31.8%, and 95.7%, respectively. Safety say the increase in its expense ratio is do to nonrecurring legal fees related to reinsurance arbitration, contingent commissions and restricted stock compensation.
In addition to reporting on its third quarter results, the Boston-based insurer also announced that its Board of Directors has approved and declared a quarterly cash dividend of $0.80 per share on the issued and outstanding common stock, payable on December 15, 2017 to shareholders of record.
Liberty Mutual reported net loss of $665 million and $188 million with respect to its third quarter and year-to-date results ending on September 30, 2017. Including $1 million and $2 million of net income attributable to non-controlling interest, consolidated net loss for the three and nine months ended September 30, 2017 was $664 million and $186 million, respectively.
“Net loss in the quarter of $665 million, was driven by the after tax impact of hurricanes Harvey, Irma, and Maria, which totaled $1.2 billion. The fundamentals of the business though remain healthy, as evidenced by a 1.7 point reduction in the core combined ratio down to 92.5%,” said David H. Long, Chairman and CEO of Liberty Mutual Insurance.
While the catastrophe losses are significant, they serve as a very real reminder of why we are here. It is in times of crisis that our customers expect us to respond immediately with care, compassion and restitution. Our employees continue to work tirelessly in the impacted areas to help our customers through the daunting challenge of getting back on their feet as quickly as possible.”
The following are some third quarter highlights from the earnings release:
- Net written premium (“NWP”) for the three months ended September 30, 2017 was $10.379 billion, an increase of $1.070 billion or 11.5% over the same period in 2016.
- Pre-tax operating loss before partnerships, limited liability companies (“LLC”) and other equity method income for the three months ended September 30, 2017 was $1.233 billion, versus $417 million for the same period in 2016.
- Ironshore Inc. (“Ironshore”) acquisition and integration costs, net of tax for the three months ended September 30, 2017 were $28 million versus zero for the same period in 2016.
- The consolidated combined ratio before catastrophes1, net incurred losses attributable to prior years2 and current accident year re-estimation3 for the three months ended September 30, 2017 was 92.5%, a decrease of 1.7 points from the same period in 2016. Including the impact of catastrophes, net incurred losses attributable to prior years
and current accident year re-estimation, the Company’s combined ratio4 for the three months ended September 30, 2017 increased 18.4 points to 116.2%.
Worcester-based The Hanover has reported net income of $11.1 million, or $0.26 per diluted share, for the third quarter of 2017. This is compared to net income of $88.4 million, or $2.06 per diluted share, for the same quarter in the year prior (2016). As for operating income, the carrier announced that it was $4.7 million, or $0.11 per diluted share, as compared to $78.6 million, or $1.83 per diluted share, in the prior-year quarter.
The following are additional highlights from the Third Quarter Results:
- Current accident year catastrophe losses* of $202.4 million before taxes, or 16.5% of earned premiums, primarily due to hurricanes Harvey, Irma, and Maria and earthquakes in Mexico
- Combined ratio, excluding catastrophes(2), of 88.9%, an improvement of 3.0 points over the prior-year quarter
- Net premiums written of $1.3 billion; up 5.7%, driven primarily by growth in Personal and Commercial Lines
- Continued price increases in Commercial and Personal Lines
- Net investment income of $76.6 million, up 13.0% compared to the prior-year quarter
- Book value per share of $70.10, down 0.1% from the second quarter of 2017; book value per share, excluding net unrealized gains on investments(3), of $64.71, down 0.2% from the second quarter of 2017.
In addition to its third quarter results, the carrier also announced that its Board of Directors has declared a quarterly dividend of $0.54 per share on the issued and outstanding common stock of the company, payable December 29, 2017, to shareholders of record at the close of business on December 15, 2017. In commenting on the announcement, John C. Roche, the new president and chief executive officer at The Hanover had this to say,
We are pleased to announce an 8% increase in our regular quarterly dividend. This year’s increase represents the 13th consecutive year in which we have enhanced our dividend, and is a reflection of the confidence our board has in our company’s overall financial condition and prospects. We will continue to further strengthen and position our company to succeed in both the short and long term.”
For this third quarter of 2017, The Hartford has reported net income of $234 million and core earnings of $222 million, a decrease from $438 million and $413 million, respectively. The carrier, like others have mentioned, attributes this primarily to higher current accident year catastrophe losses.
Specifically, the insurer said current accident year catastrophe losses totaled $352 million, before tax ($229 million, after tax), including losses from Hurricane Harvey of $175 million, before tax, and Hurricane Irma of $157 million, before tax. In comparison, third quarter 2016 current accident year catastrophe losses totaled $80 million, before tax ($52 million, after tax).
“The Hartford’s third quarter results included a significant amount of property and casualty catastrophe losses, which totaled $229 million, after tax, primarily from hurricanes. Aside from catastrophes, our results remained strong at each segment, meeting or beating our expectations,” said The Hartford’s Chairman and CEO Christopher Swift. “Investment results also contributed, with excellent returns on limited partnerships, stable portfolio yields and low levels of impairments or credit losses. Reflecting our strong underlying results, for the fifth consecutive year we raised our quarterly common dividend, which will increase by 9% effective with the January 2, 2018 payment.”
The Hartford’s President Doug Elliot said, “Based on activity year-to-date, 2017 will likely be the highest catastrophe year that the U.S. property and casualty industry has seen in more than a decade. Our catastrophe losses were largely consistent with the estimate we provided earlier this month, and our claims organization continues to perform at its best, handling multiple events across several states. We believe that our claims organization is one of our competitive advantages, and I am proud of the dedication and quality service that our team is providing to our policyholders. Excluding catastrophe losses, margins remain strong in Commercial Lines and Group Benefits. Personal Lines continues to demonstrate that the multiple profitability initiatives we have launched since late 2015 are gaining traction and improving our bottom line results.”
Some highlights from The Hartford’s Third Quarter include the following:
- Commercial Lines net income of $90 million and core earnings of $81 million declined from $268 million and $243 million, respectively, in third quarter 2016 primarily due to higher current accident year catastrophe losses.
- The Commercial Lines combined ratio of 108.6 in third quarter 2017 increased 14.7 points from 93.9 in third quarter 2016 primarily due to a 13.1 point increase in catastrophe losses
- Personal Lines net income of $8 million and core earnings of $7 million declined from net income of $33 million and core earnings of $29 million in third quarter 2016 due to higher current accident year catastrophe losses
- The Personal Lines combined ratio of 104.0 increased 3.8 points from 100.2 in third quarter 2016 due to a 5.1 point increase in current accident year catastrophe losses, partially offset by improved underlying underwriting results.
Following the theme, Chubb Limited also reported a net loss for the third quarter of 2017. According to the carrier, net loss was $(70) million, or $(0.15) per share, compared with net income of $1,360 million, or $2.88 per share, for the same quarter last year. Operating loss was $(60) million, or $(0.13) per share, compared with operating income of $1,356 million, or $2.88 per share, for the same quarter last year.
With respect to its property and casualty (P&C) combined ratio, it was 110.8% for the quarter driven by significant catastrophe losses. In commenting on this quarter, Evan G. Greenberg, Chairman and Chief Executive Officer of Chubb Limited, note the following:
While it was a tough quarter for CATs, it’s the business we’re in. We experienced a series of significant natural catastrophes, including three hurricanes and two earthquakes, which will likely produce the third $100 billion-plus year for insured catastrophe losses globally for the industry in the last 12 years.
We ran a 111% combined ratio and produced a loss of 13 cents per share, or essentially a quarter of our annual earnings, which is within our tolerance for risk and the amount of loss we would expect for these events. I’m proud of our claims and loss prevention organization’s response serving our customers in their time of need. They continue to distinguish our company. The Chubb brand is all about service – we truly aim to serve our customers and go beyond their expectations.
Our underlying operating results demonstrate the strength and vitality of the company. P&C net premiums written grew about 4.5% in the quarter. Excluding the catastrophe losses, both operating earnings and underwriting results were simply excellent. Our two sources of income were both records in the quarter – net investment income, up 7.5%, and P&C current accident year underwriting income excluding catastrophe losses, up about 5.5%, with a current accident year combined ratio excluding catastrophes of 88.5%. We also had record operating cash flow of $1.8 billion.
I believe we are at the beginning of a firming price environment, driven by years of soft pricing that has resulted in inadequate rates in many classes. The magnitude of this year’s CAT losses, which on a worldwide aggregate basis was between a one-in-five and one-in-10 year industry event, simply adds to the pressure to return to pricing that produces an adequate risk-adjusted return. In that regard, we intend as usual to demonstrate leadership.
Our company is in great shape from the perspectives of risk management, growth opportunity and financial efficiency. We are investing aggressively in our future while delivering results to shareholders today, and we are optimistic about the future.”
Highlights from Chubb’s Third Quarter Report:
- Pre-tax catastrophe losses, net of reinsurance and including reinstatement premiums, were $1,893 million in the quarter, including $650 million, $891 million, and $220 million from hurricanes Harvey, Irma, and Maria, respectively; $25 million from the earthquakes in Mexico; and $107 million from other catastrophe losses. After-tax catastrophe losses were $1,525 million in the quarter, or $3.27 per share.
- Net loss was $(70) million in the quarter compared with net income of $1,360 million in the prior year. Operating loss was $(60) million in the quarter compared with operating income of $1,356 million in the prior year.
- Excluding catastrophe losses, operating income was $1,465 million, or $3.12 per share,(1) compared with $1,463 million, or $3.10 per share, in the prior year.
- Consolidated and P&C net premiums written were up 4.3% and 4.6%, respectively, to $7.9 billion and $7.4 billion. On a constant-dollar basis and excluding merger-related underwriting actions,(2) P&C net premiums written were up 4.0%.
- The P&C combined ratio was 110.8%, compared with 86.0% in 2016. The P&C combined ratio excluding catastrophe losses was 84.7%. The P&C current accident year combined ratio excluding catastrophe losses was 88.5%, compared with 88.9% in 2016. P&C current accident year underwriting income excluding catastrophe losses was $839 million, up 5.6%.
- Adjusted net investment income was a record $893 million, up 7.5%.
- Operating cash flow was a record $1.8 billion.
“Now that we have successfully completed the separation of our U.S. retail business, we look forward to delivering more predictable earnings and stronger free cash flow in the protection and fee-based businesses that form the core of the new MetLife,” said Steven A. Kandarian, chairman, president and CEO, MetLife Inc. “I am pleased with our volume growth and the solid operating results we delivered in the third quarter.”
A summary of MetLife’s Third Quarter Report:
- Net loss of $87 million, compared to net income of $571 million in the third quarter of 2016, including $1.1 billion in Brighthouse Financial, Inc. (“Brighthouse”) separation-related charges. On a per share basis, the net loss was $0.08, compared to net income of $0.51 in the prior-year period.
- Net loss includes $124 million, after tax, in net derivative losses reflecting changes in foreign currencies, interest rates and equity markets.
- Operating Earnings* of $1.2 billion, or $1.09 per share.
- Book value was $51.83 per share down 25 percent from $69.35 per share at September 30, 2016, primarily due to the separation of Brighthouse.
- Book value, excluding accumulated other comprehensive income (AOCI) other than foreign currency translation adjustments (FCTA)*, was $40.96 per share, down 23 percent from $53.40 per share at September 30, 2016.
- Return on Equity (ROE) of (0.6) percent.
- Operating ROE*, excluding AOCI other than FCTA, of 9.6% percent; Operating tangible ROE* of 12.0 percent.
In a quarter of unprecedented hurricane activity, our strength in underwriting and our investment expertise enabled us to deliver core income of $253 million and core return on equity of 4.5%,” commented Alan Schnitzer, Chairman and Chief Executive Officer. “Our disciplined coastal underwriting stood up to the storms, and we also delivered a consolidated underlying combined ratio of 92.8%, with
all three segments contributing to the solid result.
The results in Business Insurance benefited from higher earned premiums and lower general and administrative expenses, while Bond & Specialty Insurance delivered another quarter of impressive profitability.
Within Personal Insurance, the underlying combined ratio in auto improved, reflecting the continued successful execution of pricing and underwriting actions we began implementing a year ago. Our high-quality investment portfolio continued to perform well, benefiting from strong private equity returns. Additionally, we were able to return $528 million to shareholders in the quarter, including $328 million in share repurchases.
“We also continue to be pleased with the execution of our marketplace strategies, which resulted in record net written premiums of $6.7 billion this quarter, a 4% increase over the prior year quarter. In our commercial businesses, retention remained at historic highs, renewal premium change remained positive and consistent with recent periods and the level of new business increased. In Personal
auto, renewal premium change reached double digits in September, consistent with our plans to improve profitability, and we maintained the positive momentum in our homeowners business with 5% growth in policies in force quarter-over-quarter.
“In the wake of the many devastating events this quarter, our thoughts and prayers are with all who have been impacted. We also extend our deep gratitude to our claim professionals, who tirelessly demonstrate to our customers and agents the value of the Travelers promise.
Travelers Third Quarter Results:
- Net income of $293 million and core income of $253 million impacted by $700 million pre-tax ($455 million after-tax) of catastrophe losses.
- Combined ratio of 103.2% (including 10.7 points of catastrophe losses) and underlying
combined ratio of 92.8%.
- Net investment income of $588 million pre-tax ($457 million after-tax) benefited from strong private equity returns.
- Record net written premiums of $6.660 billion up 4% over prior year quarter, with growth in all segments.
- Total capital returned to shareholders of $528 million in the quarter, including $328 million of share repurchases. Year-to-date total capital returned to shareholders of $1.680 billion, including $1.089 billion of share repurchases.
- Book value per share of $86.73 and adjusted book value per share of $83.06, up 4% and 3%, respectively, from year-end 2016.
- Board of Directors declared quarterly dividend per share of $0.72.
Straight from the quarterly report:
Premiums written in the third quarter and first nine months of 2017 increased approximately $1.15 billion (16.5%) and $3.2 billion (16.3%), respectively, compared to 2016.
Premiums earned in 2017 increased 16.5% in the third quarter and 15.2% in the first nine months compared to the same periods in 2016. Over the past year, voluntary auto policies-in-force grew approximately 9.9% and premiums per auto policy increased 6.0%. The increase in average premiums per policy was attributable to rate increases, coverage changes and changes in state and risk mix.
Voluntary auto new business sales in 2017 increased 15.8% in the first nine months compared to the same period in 2016. Voluntary auto policies-in-force increased approximately 1,144,000 during the first nine months of 2017.
In the third quarter and first nine months of 2017, we incurred pre-tax underwriting losses compared to pre-tax gains in the corresponding 2016 periods. In the third quarter of 2017, our underwriting results included significant losses from hurricanes Harvey and Irma. Our underwriting results in 2017 were also affected by increased average claims severities.
Losses and loss adjustment expenses in 2017 increased approximately $1.6 billion (30.0%) in the third quarter and $3.3 billion (21.5%) in the first nine months compared to the corresponding periods in 2016. Our loss ratio (the ratio of losses and loss adjustment expenses to earned premiums) for the third quarter and first nine months of 2017 increased 9.5 percentage points and 4.4 percentage points, respectively, compared to the same periods in 2016. In the third quarter of 2017, we incurred estimated losses related to hurricanes Harvey and Irma of approximately $500 million (6.6% of premiums earned in the third quarter and 2.3% in the first nine months).
Average claims severities were higher in the first nine months of 2017 for property damage and collision coverages (four to six percent range) and bodily injury coverage (five to seven percent range). Claims frequencies in the first nine months of 2017 were relatively flat compared to 2016 for property damage, collision and bodily injury coverages and decreased about three percent for personal injury protection coverage. Losses and loss adjustment expenses in the first nine months of 2017 included pre-tax losses of $37 million from the re-estimation of liabilities for prior years’ claims compared to pre-tax gains of $382 million in 2016. Underwriting expenses in the third quarter and first nine months of 2017 increased $25 million (2.5%) and $235 million (8.1%), respectively, compared to 2016. Our expense ratios (underwriting expenses to premiums earned) in 2017 declined 1.9 percentage points in the third quarter and 0.9 percentage points in the first nine months compared to 2016. The largest components of underwriting expenses are employee related (salaries and benefits) and advertising, which increased at a slower rate than premiums earned.
The country’s fourth largest auto insurer does not issue quarterly, but rather monthly reports in a graph format. As such, we are including the insurer’s results for October 2017, the latest information that is available:
“Allstate’s focus on achieving balanced operating performance resulted in continued progress on 2017’s operating priorities, including returning auto insurance margins to historical levels,” said Tom Wilson, chairman and chief executive officer of The Allstate Corporation.“Net income was $637 million and operating income* was $587 million, or $1.60 per share, in the third quarter of 2017. Improved profitability in auto insurance reflects the profit improvement actions begun in 2015 and a significant broad-based decrease in the frequency of auto accidents. Allstate brand homeowners insurance also generated strong profitability, with a recorded combined ratio of 90.7 for the first nine months of 2017, despite $1.6 billion of catastrophe losses. Investment income increased in both the market-based and performance-based portfolios. As a result, Allstate Financial operating income rose to $157 million in the quarter. Operating income return on equity* increased to 13.9% for the twelve months ended September 30, 2017.‘We continued to deliver on all five 2017 operating priorities, which focus on both near-term performance and long-term value creation. Better serving customers remains a top growth priority, and the net promoter score measure has improved in many of our businesses this year. Total policies in force increased to 78 million through the third quarter, largely due to growth at SquareTrade and Allstate Benefits that was partially offset by reductions in the property-liability businesses.Improvements in Allstate brand auto insurance retention and new issued applications mitigated some of the impacts from the profit improvement programs across the three underwritten property-liability brands. Progress was also made on building long-term growth platforms, including expanding Arity’s connected car strategy,” concluded Wilson.Operating Results: Third Quarter 2017
- Total revenue of $9.7 billion in the third quarter of 2017 increased 4.8% compared to the prior year quarter.
- Property-Liability insurance premiums increased 3.2%
- Allstate Financial premiums and contract charges increased 3.9%
- Net investment income increased 12.7%
- Realized capital gains were $103 million compared to $33 million in the prior year quarter
- Net income applicable to common shareholders was $637 million, or $1.74 per diluted share, in the third quarter of 2017, compared to $491 million, or $1.31 per diluted share, in the third quarter of 2016. Operating income* was $587 million in the third quarter of 2017, compared to $474 million in the third quarter of 2016.
- Property-Liability underwriting income of $429 million was $74 million above the prior year quarter, due to higher premiums, a broad-based decline in the frequency of auto accidents and favorable prior year reserve releases. These improvements were partially offset by elevated catastrophe losses related to Hurricanes Harvey and Irma.
- The underlying combined ratios* of 85.4 for the third quarter and 85.2 for the first nine months of 2017 were significantly lower than the prior year periods, reflecting improvement in the auto underlying combined ratio across all three underwritten brands. The full year result for 2017 is expected to be below the lower end of the annual outlook range of 87-89(1).