4th Quarter & 2017 Full Year Results: MAPFRE, Safety, The Hartford, The Hanover, Travelers, Chubb, Liberty Mutual, MetLife, Progressive, GEICO & Allstate

In our pursuit of providing the most comprehensive and timely information on the Massachusetts insurance industry, the following is a rundown of the Fourth Quarter as well as Full Year Results for 2017 from some of the leading insurers in Massachusetts. Most publicly traded insurers are required by law to issue quarterly as well as annual results which are the ones we have featured here.

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…

MAPFRE – 4th Quarter & Full Year 2017 Results

MAPFRE posted revenues of just under 28 billion euros for 2017, which represents a 3.3 percent increase over the previous year, while premiums grew 2.9 percent to almost 23.5 billion euros (each euro equals $1.23). The Group’s net profit was 701 million euros, down 9.7 percent due to the extraordinary cost of the natural disasters that occurred in 2017, with a net impact on earnings of 126 million euros. This does not include the cost assumed by MAPFRE RE since it is regarded as ordinary in its line of business.

“Very few companies are capable of absorbing such extraordinary catastrophic risk as we witnessed in 2017 into their results, which in MAPFRE’s case, consisted of handling two earthquakes and three hurricanes. Closing the year with earnings in excess of 700 million euros is clear proof of MAPFRE’s capacity and solvency. It also demonstrates the fruits we are reaping from our profitable growth strategy, which compensates for these extraordinary events,” said Antonio Huertas, MAPFRE’s chairman and CEO.

Selected Highlights:

In 2017 the Insurance Unit booked 19.4 billion euros in premiums, up 3.7 percent on the previous year.
The North America Regional Area closed the year with premiums of almost 2.6 billion euros (-3.6 percent).
In the United States, premiums eased 2.6 percent to 2.2 billion euros.
MAPFRE is currently reorganizing its business in the USA to optimize its structure for profitable growth and concentrate operations in fewer states.
The Northeast region including Massachusetts continues contributing positively to results

Full Year Global Highlights:

Premiums exceed 23.4 billion euros, an increase of 2.9 percent.
The net cost of last September’s natural disasters is 157 million euros, 20 million euros less than the initial estimate.
The combined ratio improves in most regions, and in Spain in particular, to stand at 93.4 percent.
MAPFRE grows by 4 percent in Spain, compared with a 0.7 percent fall for the market.
VERTI Spain, MAPFRE’s direct digital distribution channel, generated profits for the first time in 2017.
Excellent performance from MAPFRE RE, contributing 163 million to Group profits despite catastrophe impacts.
MAPFRE to pay its shareholders 14.5 cents per share against the 2017 results.

SAFETY – 4th Quarter and Full Year 2017 Results

Net income for the quarter ended December 31, 2017 was $11.3 million, or $0.72 per diluted share, compared to net income of $12.0 million, or $0.79 per diluted share, for the comparable 2016 period.

Net income for the year ended December 31, 2017 was $62.4 million, or $4.10 per diluted share, compared to net income of $64.6 million, or $4.27 per diluted share, for the comparable 2016 period.

Direct written premiums for the quarter ended December 31, 2017 increased by $3.6 million, or 2.0%, to $184.7 million from $181.1 million for the comparable 2016 period.

Direct written premiums for the year ended December 31, 2017 increased by $15.7 million, or 1.9%, to $827.3 million from $811.6 million for the comparable 2016 period.

The 2017 increase occurred in our private passenger automobile, commercial passenger automobile and homeowner lines of business, which experienced increases in average written premium per exposure of 3.3%, 2.3% and 4.0% respectively.

Net written premiums for the quarter ended December 31, 2017 increased by $3.6 million, or 2.1%, to $171.9 million from $168.3 million for the comparable 2016 period.

Net written premiums for the year ended December 31, 2017 increased by $14.6 million, or 1.9%, to $781.1 million from $766.5 million for the comparable 2016 period.

Net earned premiums for the quarter ended December 31, 2017 increased by $4.4 million, or 2.3%, to $196.4 million from $192.0 million for the comparable 2016 period. Net earned premiums for the year ended December 31, 2017 increased by $18.6 million, or 2.5%, to $774.4 million from $755.8 million for the comparable 2016 period. Net earned premiums increased primarily due to increases in our automobile and homeowners business as discussed above.

Loss, expense, and combined ratios calculated under generally accepted accounting principles for the quarter ended December 31, 2017 were 68.6%, 33.0%, and 101.6%, respectively, compared to 66.3%, 31.8%, and 98.1%, respectively, for the comparable 2016 period.

Loss, expense, and combined ratios calculated under generally accepted accounting principles for the year ended December 31, 2017 were 65.1%, 32.1%, and 97.2%, respectively, compared to 65.3%, 30.8%, and 96.1%, respectively, for the comparable 2016 period. The increase in the expense ratio is primarily attributable to increases in contingent commissions and nonrecurring legal fees related to reinsurance arbitration.

On February 15, 2018, The Board of Directors approved a $0.80 per share quarterly cash dividend on its issued and outstanding common stock payable on March 15, 2018 to shareholders of record at the close of business on March 1, 2018.

LIBERTY MUTUAL – 4th Quarter & Full Year 2017 Results

Liberty Mutual Holding Company Inc. and its subsidiaries reported net income attributable to LMHC of $205 million and $17 million for the three and twelve months ended December 31, 2017, an increase of $62 million and a decrease of $989 million versus the same periods in 2016, respectively. Including zero and $2 million of net income attributable to non-controlling interest, consolidated net income for the three and twelve months ended December 31, 2017 was $205 million and $19 million, respectively.

Net written premium grew 8.8% in the quarter, with net income at $205 million, up $62 million from last year. Profitability increased, despite higher catastrophe losses and a Tax Cuts and Jobs Act related charge, due to improved investment results,” said David H. Long, Liberty Mutual Chairman and Chief Executive Officer. “For the year, we reported net income of $17 million, versus $1 billion in 2016, driven by record catastrophes, adverse development on commercial automobile, and the charge associated by the change in the tax law. While the results in 2017 did not meet expectations, we are encouraged by signs of market firming across each of our businesses.

Subsequent to year-end, we announced the sale of Liberty Life Assurance Company of Boston to Lincoln Financial and a realignment of our core business. These actions will allow the organization to focus on property and casualty insurance, and to take full advantage of our scale, products, and capabilities globally.”

Fourth Quarter Highlights

Net written premium for the three months ended December 31, 2017 was $8.861 billion, an increase of $716 million or 8.8% over the same period in 2016.

Pre-tax operating income (“PTOI”) before partnerships, limited liability companies (“LLC”) and other equity method income (loss) for the three months ended December 31, 2017 was $165 million, a decrease of $264 million or 61.5% from the same period in 2016.

Net operating income before partnerships, LLC and other equity method income (loss) for the three months ended December 31, 2017 was $65 million, a decrease of $270 million or 80.6% from the same period in 2016.

Net realized gains (losses), net of tax, for the three months ended December 31, 2017 were $72 million versus ($42) million for the same period in 2016.

Consolidated net income for the three months ended December 31, 2017 was $205 million, a decrease of $1 millionor 0.5% from the same period in 2016.

Net income attributable to LMHC for the three months ended December 31, 2017 was $205 million, an increase of $62 million or 43.4% over the same period in 2016.

Cash flow provided by continuing operations for the three months ended December 31, 2017 was $360 million, a decrease of $478 million or 57.0% from the same period in 2016.

The consolidated combined ratio before catastrophes, net incurred losses attributable to prior years, and current accident year re-estimation for the three months ended December 31, 2017 was 94.6%, an increase of 0.9 points over 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 ratio for the three months ended December 31, 2017 increased 3.5 points to 100.5%.

Full Year Highlights

Net written premium for the twelve months ended December 31, 2017 was $36.789 billion, an increase of $2.932 billion or 8.7% over the same period in 2016.

Pre-tax operating loss before partnerships, LLC and other equity method income for the twelve months ended December 31, 2017 was $1.004 billion versus pre-tax operating income before partnerships, LLC and other equity method income of $1.485 billion for the same period in 2016.

Net operating loss before partnerships, LLC and other equity method income for the twelve months ended December 31, 2017 was $746 million versus net operating income before partnerships, LLC and other equity method income of $1.124 billion for the same period in 2016.

Net realized gains (losses), net of tax, for the twelve months ended December 31, 2017 were $297 million versus ($81) million for the same period in 2016.

Consolidated net income for the twelve months ended December 31, 2017 was $19 million, a decrease of $1.050 billion or 98.2% from the same period in 2016.

Net income attributable to LMHC for the twelve months ended December 31, 2017 was $17 million, a decrease of $989 million or 98.3% from the same period in 2016.

Cash flow provided by continuing operations for the twelve months ended December 31, 2017 was $1.824 billion, a decrease of $388 million or 17.5% from the same period in 2016.

The consolidated combined ratio before catastrophes and net incurred losses attributable to prior years for the twelve months ended December 31, 2017 was 94.1%, an increase of 0.4 points over the same period in 2016. Including the impact of catastrophes and net incurred losses attributable to prior years, the Company’s combined ratio for the twelve months ended December 31, 2017 increased 7.3 points to 105.6%.

Financial Condition as of December 31, 2017

Total debt was $8.325 billion as of December 31, 2017, an increase of $722 million or 9.5% over December 31, 2016.

Total equity was $20.688 billion as of December 31, 2017, an increase of $301 million or 1.5% over December 31, 2016.

THE HANOVER – 4th Quarter & Full Year 2017 Results

The Hanover Insurance Group, Inc. reported net income of $51.5 million, or $1.20 per diluted share, for the fourth quarter of 2017, compared to a net loss of $13.5 million, or $0.32 per diluted share, in the prior-year quarter. Operating income was $86.0 million, or $2.00 per diluted share, for the fourth quarter of 2017, compared to an operating loss of $19.7 million, or $0.46 per diluted share, in the prior-year quarter.

We are pleased with our fourth quarter and full year results,” said John C. Roche, president and chief executive officer at The Hanover. “Our performance reflects the building strength of our company and the effectiveness of our strategy. While catastrophe losses significantly impacted our earnings for the year, our business performance, excluding catastrophes, was strong, as we continued to benefit from underwriting discipline, portfolio management, top-line growth and the impact of expense reductions, delivering a combined ratio excluding catastrophes of 90.8%, which is consistent with our original expectations. We made significant progress on our Hanover 2021 strategic priorities,” Roche said, “We substantially increased our agency penetration, improved our performance in both our core and specialty domestic businesses, expanded Chaucer’s capabilities globally, and accelerated our margin expansion strategy through rigorous expense management. We look forward to 2018 with great confidence in our strategy and in our ability to deliver additional earnings improvement going forward.”

Net income for the full year 2017 was $186.2 million, or $4.33 per diluted share. This compared to net income of $155.1 million, or $3.59 per diluted share, for the full year 2016. Operating income was $203.8 million, or $4.74 per diluted share, in 2017, compared to operating income of $184.4 million, or $4.27 per diluted share, in 2016.

Fourth Quarter and Full Year Highlights

Combined ratio of 95.1% in the fourth quarter and 98.7% in the full year, including 3.8 and 7.9 points of catastrophe losses and 0.3 and 0.7 points of favorable prior-year development, respectively
Current accident year combined ratio, excluding catastrophes⁽²⁾, of 91.6% in the fourth quarter, an improvement of 2.4 points over the prior-year quarter
Current accident year combined ratio, excluding catastrophes, of 91.5% for the full year, an improvement of 1.4 points over the prior-year
Net premiums written up 8.4% in the fourth quarter and 5.5% for the full year, driven by growth in all segments, with continued price increases in Commercial and Personal Lines
Net investment income of $78.1 million in the fourth quarter, up 5.3% from the prior-year quarter, and $298.1 million for the full year, up 6.7%
Book value per share of $70.59, up 4.7% from December 31, 2016; book value per share, excluding net unrealized gains on investments⁽³⁾, of $65.75, up 4.3%
One-time non-operating tax expense of $22.3 million, or $0.52 per diluted share, related to the recently enacted changes in U.S. tax laws, consisting of a revaluation of deferred tax balances and the recognition of federal income taxes on previously untaxed income from foreign operations
On December 5, 2017, the Board of Directors approved an increase to the quarterly dividend of 8%, to $0.54 per common share

Fourth Quarter Operating Highlights

Commercial Lines

Commercial Lines operating income before taxes was $69.1 million, compared to an operating loss of $93.3 million in the fourth quarter of 2016.
The Commercial Lines combined ratio was 95.4%, compared to 122.8% in the prior-year quarter.
Catastrophe losses were $29.5 million, or 4.8 points of the combined ratio, primarily reflecting losses from California wildfires, compared to $7.6 million, or 1.3 points of the combined ratio, in the prior-year quarter.
Fourth quarter 2017 results included $9.3 million, or 1.5 points, of favorable prior-year reserve development, driven by favorable experience in workers’ compensation, compared to Commercial Lines net unfavorable prior-year reserve development of $161.5 million, or 27.6 points, which included significant reserving adjustments following a comprehensive annual reserve review.
Commercial Lines current accident year combined ratio, excluding catastrophe losses, improved 1.8 points to 92.1%, from 93.9% in the prior-year quarter, driven by both improved loss and loss adjustment expense (LAE) and expense ratios.

THE HARTFORD – 4th Quarter & Full Year 2017 Results

The Hartford reported a fourth quarter 2017 net loss of $3.7 billion compared with a net loss of $81 million in fourth quarter 2016. The fourth quarter 2017 net loss resulted from a $3.1 billion loss on discontinued operations related to the previously-announced agreement to sell Talcott Resolution, the company’s life and annuity run-off business, and an $877 million charge due to the reduction in the U.S. corporate tax rate that was effective Jan. 1, 2018. Fourth quarter 2017 net loss per share was $10.37 compared with a net loss per share of $0.22 in fourth quarter 2016.

Fourth quarter 2017 core earnings were $293 million, essentially flat compared with $294 million in fourth quarter 2016, as favorable prior accident year development (PYD) compared with unfavorable prior accident year development in fourth quarter 2016, improved current accident year Personal Lines results before catastrophes and higher Group Benefits and Mutual Funds core earnings offset significantly higher current accident year catastrophe losses and lower current accident year Commercial Lines results before catastrophes. Current accident year catastrophe losses rose from $61 million, before tax ($40 million, after tax), in fourth quarter 2016 to $179 million, before tax ($116 million, after tax) in fourth quarter 2017. Core earnings per diluted share were $0.81, a 5% increase from $0.77 per diluted share in fourth quarter 2016 due to the 5% reduction in weighted average diluted shares outstanding during the period.

“In the face of record catastrophe losses for the industry, 2017 was an outstanding year at The Hartford, with several major accomplishments and very strong business results,” said The Hartford’s Chairman and CEO Christopher Swift. “These accomplishments included the announcement to sell Talcott Resolution and the acquisition of Aetna’s U.S. group life and disability business, along with improved profitability in personal auto, excellent results from Group Benefits and Mutual Funds and very good investment returns. Although we posted a net loss for the year due to our strategic actions and the impact of U.S. corporate tax reform, full year core earnings per diluted share were up 19 percent.”

The Hartford’s President Doug Elliot said, “Our P&C results were very strong in 2017, and we are pleased with our performance in a year with record catastrophes affecting the industry, reflecting the benefit of underwriting and pricing actions we have taken over the last several years. Personal Lines’ turnaround continued, with the auto line returning to underwriting profitability on an underlying basis and additional progress underway in 2018. In Commercial Lines, Small Commercial continued its track record of strong margins and top line growth. Group Benefits delivered premium growth and excellent earnings in 2017, and we are intently focused on integration in order to utilize expanded capabilities across the platform.”

Selected highlights from Fourth Quarter and Full Year 2017 Results

The full year 2017 net loss of $3.1 billion included a $2.9 billion loss on discontinued operations, an $877 million charge due to the reduction in the U.S. corporate tax rate, and a second quarter 2017 $488 million, after tax, pension settlement charge.
Core earnings, which do not include these three items, were $1.0 billion, an 11% increase from 2016.
Core earnings increased in 2017 despite a significant increase in catastrophe losses due to a change to favorable prior accident year development in 2017 from unfavorable prior accident year development in 2016.
Current accident year catastrophe losses, before tax, increased from $416 million, before tax, in 2016 to $836 million, before tax, in 2017 while prior accident year development changed from an unfavorable prior accident year development of $457 million, before tax, in 2016 to favorable prior accident year development of $41 million, before tax, in 2017.
The unfavorable prior accident year development in 2016 included $268 million, before tax ($174 million, after tax), for asbestos and environmental (A&E) liabilities and $160 million, before tax ($104 million, after tax), for personal auto liability.
In 2017, as a result of the company’s aggregate excess of loss reinsurance agreement covering A&E exposures, there was no charge for unfavorable prior accident year development on A&E. In addition, there was no net unfavorable prior accident year development on personal auto liability in 2017.
Excluding current accident year catastrophes and prior accident year development, core earnings were up 3% in 2017 due to improved personal auto underwriting results and higher Mutual Funds and Group Benefits core earnings, largely offset by deterioration in Commercial Lines underwriting margins.

CHUBB – 4th Year & Full Year 2017 Results

“Our fourth quarter results were highlighted by core operating income per share, up 16.5%, which was aided by a one-time benefit from tax reform, excellent ex-CAT underwriting performance from every division, a core operating ROE of 12% and improving commercial P&C pricing in a number of our businesses globally. On the other hand, the quarter was impacted by the two largest wildfires in California history. Net P&C premiums excluding merger-related actions were up 3.7% for the quarter and contributed to growth of 6.3% for the year. With merger-related underwriting actions and their impact on revenue growth largely behind us, a strong economy, both domestic and global, and positive momentum continuing to build for commercial P&C pricing in a number of classes, we are quite optimistic about our prospects for improved premium revenue growth in the year ahead.

“For the year, we produced $3.8 billion in core operating income, down 20% from what we would have earned with a normalized level of annual catastrophe losses and without the benefit from tax reform. Pretax, current accident year underwriting income excluding CATs was $3.3 billion, up 14%, while investment income was a record $3.5 billion, up 6%. Our published results led to a core operating ROE of nearly 8% and reasonably strong book and tangible book value per share growth of 6.5% and 8.6%, respectively.

“In the quarter, the P&C combined ratio was 90.7%, and for the year it was 94.7%, which includes $2.7 billion in net catastrophe losses. Those combined ratios, given what was likely a record or near-record year for worldwide insured natural catastrophe losses, demonstrate the quality of our underwriting and our balanced book of business. On a current accident year basis excluding the CATs, the combined ratio for the year was 87.6%, compared with 89% in 2016.”

Selected highlights from Fourth Quarter and Full Year 2017 Results

Fourth quarter net income of $1.533 billion and core operating income of $1.489 billion included a provisional tax benefit of $450 million, or $0.96 per share, related to the 2017 U.S. Tax Cuts and Jobs Act (2017 Tax Reform) and a one-time expense related to a contribution of $50 million ($32.5 million after-tax) to the Chubb Charitable Foundation to make a difference in society. Excluding these items, core operating income in the quarter was $2.28 per share.
Pretax catastrophe losses, net of reinsurance and including reinstatement premiums, were $447 million for the quarter, including $320 million for the northern California wildfires and other catastrophe losses as previously announced, $157 million for the southern California wildfires and $30 million of favorable adjustments related to catastrophe loss events in the third quarter.
Fourth quarter P&C combined ratio was 90.7% compared with 87.8% prior year. The fourth quarter P&C current accident year combined ratio excluding catastrophe losses was 86.4% compared with 87.4% prior year.
Full-year net income was $3.9 billion, or $8.19 per share, and core operating income was $3.8 billion, or $8.03 per share, including after-tax catastrophe losses of $2.2 billion, or $4.61 per share.
Full-year P&C combined ratio was 94.7% compared with 88.7% prior year. The P&C current accident year combined ratio excluding catastrophe losses was 87.6% compared with 89.0% prior year. The year-over-year decline of 1.4 percentage points was driven by a decline in the expense ratio of 2.1 percentage points partially offset by an increase in the loss and loss expense ratio of 0.7 percentage points.
P&C current accident year underwriting income excluding catastrophe losses was $912 million for the quarter, up 10.3%, and $3,347 million for the year, up 13.7%.
Consolidated and P&C net premiums written were $7.1 billion and $6.5 billion, respectively, for the quarter and $29.2 billion and $27.1 billion, respectively, for the year. Excluding merger-related actions, (2) P&C net premiums written were up 3.7% for the quarter and up 6.3% for the year. Merger-related actions are now largely completed. Foreign currency movement favorably impacted premium growth in the quarter by 1.2% and had no impact on premium growth for the year.
The annualized ROE and core operating ROE were both 12.1% for the quarter and 7.8% for the year.
Adjusted net investment income was $873 million, pretax, for the quarter and a record $3.5 billion, pretax, for the year, up 3.5% and 6.1%, respectively.
Operating cash flow was $1.1 billion for the quarter and $4.5 billion for the year.

METLIFE – 4th Quarter & Full Year 2017 Results

“Although our underlying financial performance remained solid, the reserve charge and its impact on our fourth quarter and full year earnings — as well as the material weakness that led us to delay our earnings announcement — are unacceptable and deeply disappointing,” said Steven A. Kandarian, chairman, president and CEO of MetLife, Inc.

We can and will do better. We are rigorously addressing the situation and are committed to significantly improving our operational performance to better serve our customers and strengthen shareholders’ confidence in our organization. MetLife is an iconic franchise with strong businesses, and we are working very hard to continue to successfully execute on our strategy and deliver great value to our customers and shareholders.”

Fourth Quarter Results Summary

Net income of $2.1 billion, compared to a loss of $2.2 billion in the fourth quarter of 2016. On a per share basis, net income was $1.97, compared to a loss of $2.03 in the prior-year period.
Adjusted Earnings of $678 million, or $0.64 per share.
Book value was $53.57 per share down 10 percent from $59.35 per share at December 31, 2016, primarily due to the separation of Brighthouse Financial, Inc. and its subsidiaries (Brighthouse).
Book value, excluding accumulated other comprehensive income (AOCI) other than foreign currency translation adjustments (FCTA), was $42.24 per share, down 15 percent from $49.61 per share at December 31, 2016.
Return on Equity (ROE) of 15.2 percent.
Adjusted ROE, excluding AOCI other than FCTA, of 6.2 percent; Adjusted tangible ROE of 8.1 percent.

Full Year Results Summary

Net income of $3.6 billion, compared to net income of $627 million for the full year 2016. On a per share basis, net income was $3.38, up from $0.57 for the full year 2016.
Adjusted Earnings of $4.2 billion, or $3.93 per share.
ROE of 5.9 percent.
Adjusted ROE, excluding AOCI other than FCTA, of 8.5 percent for the full year 2017; Adjusted tangible ROE of 10.6 percent.

TRAVELERS

The Travelers Companies, Inc. today reported net income of $551 million, or $1.98 per diluted share, for the quarter ended December 31, 2017, compared to $943 million, or $3.28 per diluted share, in the prior year quarter.

Net income in the quarter included a charge of $129 million related to the passage of the Tax Cuts and Jobs Act of 2017.

Net income in the quarter also included net realized investment gains of $70 million pretax ($47 million after-tax), as compared to $35 million pretax ($24 million after-tax) in the prior year quarter.

Core income in the current quarter was $633 million, or $2.28 per diluted share, compared to $919 million, or $3.20 per diluted share, in the prior year quarter. The decrease in core income was primarily driven by significantly higher catastrophe losses and a benefit in the prior year quarter of $126 million pretax ($82 million after-tax) from the settlement of a reinsurance dispute. These impacts to core income were partially offset by higher net favorable prior year reserve development in the current quarter. Per diluted share amounts benefited from the impact of share repurchases.

We were pleased to report fourth quarter core income of $633 million and core return on equity of 11.1%, particularly in light of the high level of catastrophe losses arising out of the California wildfires,” commented Alan Schnitzer, Chairman and Chief Executive Officer. “The consolidated underlying combined ratio remained strong at 92.4% as our commercial business continued to perform well and results in our personal auto business improved meaningfully due to the successful execution of the pricing and underwriting actions we began implementing a year ago…

…We grew net written premiums by 6% in the quarter, including 5% in our commercial businesses and 8% in Personal Insurance, as we successfully executed our marketplace strategies in an improving pricing environment. In Business Insurance, domestic renewal premium change was 4%, the highest level in three years. We achieved rate increases more broadly across our product portfolio while maintaining retention at historically high levels, and we increased new business levels over the prior year quarter. In Bond & Specialty Insurance, domestic surety premiums increased 13% and retention in our domestic management liability business remained at record highs. In Personal Insurance, we achieved our dual objectives of double-digit renewal premium change in auto and continued growth in our industry-leading homeowners business.

Selected highlights from Fourth Quarter and Full Year 2017 Results

Fourth quarter net income of $551 million and core income of $633 million, including $499 million pre-tax ($324 million after-tax) of catastrophe losses.

Fourth quarter net income also included a charge of $129 million related to the passage of the Tax Cuts and Jobs Act of 2017.

Fourth quarter consolidated combined ratio of 95.5%; underlying combined ratio remained strong at 92.4%.

Fourth quarter net written premium growth of 6%; record full year net written premiums of $26.219 billion, up 5%.

Total capital returned to shareholders of $549 million in the quarter, including $351 million of share repurchases. Full year total capital returned to shareholders of $2.229 billion, including $1.440 billion of share repurchases.

Book value per share of $87.46 and adjusted book value per share of $83.36, up 5% and 4%, respectively, from year-end 2016.

Board of Directors declared quarterly dividend per share of $0.72.

GEICO

Direct from Berkshire Hathaway:

A summary of GEICO’s underwriting results follows (dollars in millions):

Premiums written in 2017 were $30.5 billion, an increase of 16.1% compared to 2016. Premiums earned in 2017 were $29.4 billion, exceeding 2016 by approximately $4.0 billion (15.5%). During 2017, our voluntary auto policies-in-force grew approximately 8.6% and premiums per auto policy increased 6.9%. 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 10.5%
compared to 2016. Voluntary auto policies-in-force increased approximately 1,276,000 during 2017.

We incurred pre-tax underwriting losses in 2017, which included approximately $450 million 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 were $25.5 billion, an increase of approximately $4.5 billion (21.2%) compared to 2016. Our loss ratio (the ratio of losses and loss adjustment expenses to earned premiums) in 2017 increased 4.0 percentage points compared to 2016. Average claims severities were higher in 2017 for property damage and collision coverages (four to six percent range) and bodily injury coverage (five to seven
percent range). Claims frequencies in 2017 were relatively unchanged compared to 2016 for bodily injury coverage, decreased about one percent for property damage and collision coverages and decreased about two to three percent for personal injury protection coverage. Losses and loss adjustment expenses in 2017 also included pre-tax losses of $517 million from the re-estimation of liabilities for prior years’ claims compared to pre-tax gains of $61 million in 2016 and $150 million in 2015.

Underwriting expenses increased $277 million (7.0%) compared to 2016. Our expense ratios (underwriting expenses to premiums earned) in 2017 declined 1.1 percentage points compared to 2016. The largest components of underwriting expenses are employee-related (salaries and benefits) and advertising, which increased at lower rates than premiums earned.

Premiums written in 2016 increased 12.5% to $26.3 billion and premiums earned increased approximately $2.8 billion (12.2%) to $25.5 billion, compared to 2015. These increases reflected voluntary auto policies-in-force growth of 7% and increased average premiums per auto policy. Voluntary auto new business sales in 2016 increased 10.9% compared to the prior year. Voluntary auto new business growth accelerated over the last half of 2016 and, for the year, voluntary auto policies-in-force increased 974,000.Losses and loss adjustment expenses incurred in 2016 increased $2.4 billion (12.9%) to $21.0 billion and our loss ratio in 2016 increased 0.5 percentage points compared to 2015.

In 2016, we experienced increases in storm losses (primarily from hail and flooding) and claims severity, partly offset by the effects of premium rate increases. Claims frequencies in 2016 were relatively unchanged from 2015 for property damage, collision, bodily injury and personal injury protection coverages. Average claims severities were higher in 2016 for bodily injury, physical damage and collision coverages (four to six percent range). Underwriting expenses in 2016 were $4.0 billion, an increase of $366 million (10.1%) over 2015. The increase in underwriting expenses in 2016 reflected the increase in policies-in-force.

PROGRESSIVE

The country’s fourth largest auto insurer does not issue quarterly, but rather monthly reports in a graph format. On January 24, 2018, Progressive issued the following results
for December 2017 and the fourth quarter of 2017:

ALLSTATE – 4TH Quarter & Full Year 2017 Results

While total revenue for 2017 was

“In 2017, Allstate excelled at delivering strong current results and implementing multiple initiatives to drive long-term profitable growth,” said Tom Wilson, Chairman and Chief Executive Officer of The Allstate Corporation.

“Policies in force reached 82.3 million, revenues grew 5% to $38.5 billion and net income was $3.07 billion due to strong performance from our market-facing businesses and investments. The Tax Cuts and Jobs Act resulted in a $506 million increase to net income and will provide future additional resources to accelerate the company’s strategies. Fourth quarter adjusted net income was $762 million, excluding the impact of tax reform and goodwill impairment related to changes in reportable segments, as auto and homeowners insurance margins remained strong and performance-based investments had outstanding results. Adjusted net income return on equity was 13.3% for 2017 and book value per share increased by 13.4% for the year. Shareholders received cash returns of $1.9 billion in 2017, which was 6% of the average market capitalization, through a combination of dividends and share repurchases.”

“This operational strength will enable us to accelerate growth in 2018 while maintaining attractive returns. Allstate brand policies in force increased in the fourth quarter from the third quarter, reflecting a shift earlier in the year from improving auto insurance margins to growing profitably. We expect the underlying combined ratio for the Property-Liability business to be between 86 and 88 for 2018, including additional growth investments as a result of the recent tax cuts. Investments in marketing, distribution, telematics, new products and technology are being accelerated. Allstate Benefits, SquareTrade and Esurance are also expected to contribute to growth in 2018. Reflecting this outlook and a reduction in the U.S. federal income tax rate, the quarterly dividend has been increased 24% to 46 cents per share for the first quarter of 2018.”

“The reduction in federal taxes also enables us to enhance the employee value proposition and improve local communities,” continued Wilson. “Employees will receive either $1,000 or $2,000 of ‘Choice Dollars’ in 2018, which can be taken as a cash bonus or contributed to a 401(k) or health savings account. This structure of employee choice will be incorporated into future benefit design. Allstate will also increase employee training in technology literacy to support sustainable employability. An additional $34 million was contributed to The Allstate Foundation in 2017 to expand existing programs and Allstate agency support for local causes. Allstate will remain focused on creating prosperity for all of our stakeholders,” concluded Wilson.

Selected highlights from Fourth Quarter and Full Year 2017 Results

Total revenue of $9.8 billion in the fourth quarter of 2017 increased 6.1% compared to the prior year quarter.
- Property and casualty insurance premiums increased 3.8%.
- Life premiums and contract charges increased 4.7%.
- Net investment income increased 14.0%.
- Realized capital gains were $127 million compared to $2 million in the prior year quarter.
The 2017 full year underlying combined ratio* for the Property-Liability and Service Businesses of 85.6 was better than the annual outlook range of 87-89.
Property-Liability underwriting income of $715 million was $86 million below the prior year quarter, primarily due to higher catastrophe losses and increased compensation costs. These costs partially offset the positive impact of increased premiums earned, lower underlying loss costs and higher favorable prior year reserve reestimates.
- Allstate brand auto net written premium grew 4.2% in the fourth quarter of 2017, reflecting a 4.5% increase in average premium compared to the prior year quarter, which was partially offset by a 0.8% decline in policies in force. Policies in force grew 0.3% compared to the third quarter of 2017 on continued improvement in the renewal ratio and new issued applications.
- Allstate brand homeowners net written premium increased 3.4% in the fourth quarter of 2017 compared to the prior year quarter, reflecting an increase in average premium. Policies in force declined 0.5% compared to the prior year quarter, but grew 0.3% compared to the third quarter of 2017. The renewal ratio of 87.5 was unchanged and new issued applications grew.
- Allstate brand other personal lines net written premium of $410 million increased 4.3% in the fourth quarter of 2017 compared to the prior year quarter. The recorded combined ratio of 84.5 was 2.6 points better than the prior year quarter, primarily driven by lower catastrophe losses. The underlying combined ratio* was 77.8 in the fourth quarter of 2017.
Encompass net written premium declined 7.6% in the fourth quarter of 2017 compared to the prior year quarter, reflecting the continued execution of profit improvement plans. The recorded combined ratio of 106.4 in the fourth quarter of 2017 was 16.4 points higher than the prior year quarter, due to catastrophe losses from California wildfires which was partially offset by lower underlying loss costs. The underlying combined ratio* of 86.4 for the fourth quarter was 4.3 points lower than the prior year quarter.