Latest NAIC’s Profitability Report shows Mass. carriers outperforming peers
The National Association of Insurance Commissioners (NAIC) has released its annual Report on Profitability by Line by State, a 570-page statistical deep dive that estimates calendar-year underwriting and investment results for every major property-and-casualty line in every state. Although the report’s disclaimer reminds readers that the numbers are approximations and “cannot and should not be used to determine whether current rates are adequate,” the publication is the only consistent, regulator-vetted yardstick for comparing state-level performance over time.
Below is a mile-high tour of the national results, followed by a closer look at the Massachusetts all-company page (page 47)—and what the 2023 figures may signal to Bay State producers, underwriters, and regulators.
Massachusetts carriers posted a 12.5 % return on net worth in 2023—nearly double the national average—even as commercial-auto writers elsewhere bled red ink.
1. Countrywide Snapshot: Softening Margins, Investment Income to the Rescue
| Metric | All Companies, All Lines | 10-Year Avg. (2014-2023) |
| Loss Ratio | 66.4 % | 64.9 % |
| Expense Ratio (LAE + Underwriting) | 16.3 % selling & 6.4 % general | ≈ 23 % combined |
| Underwriting Profit/(Loss) | -1.8 % of premium | +1.5 % |
| Profit on Insurance Transactions* | 4.5 % | 6.3 % |
| Return on Net Worth (GAAP) | 7.3 % | 6.0 % |
*Underwriting result + investment gain on insurance transactions – related taxes.
Key takeaways:
- Underwriting slipped into the red for the first time since 2020, primarily driven by personal-lines catastrophes and rising auto-physical-damage severities.
- Investment income offset the shortfall, lifting the overall return on net worth back to its 10-year average.
- Prior-year reserve releases were modest; the NAIC’s “net worth” denominator grew with surging bond yields, holding the return percentage down despite higher dollars of profit.
2. Massachusetts Overview: A Stand-Out Year
| Metric | Massachusetts | National |
| Loss Ratio | 55.6 % | 66.4 % |
| Expense Ratio (LAE + Underwriting) | 24.2 % | 22.7 % |
| Underwriting Profit/(Loss) | +8.6 % | –1.8 % |
| Profit on Insurance Transactions | 12.3 % | 4.5 % |
| Return on Net Worth | 12.5 % | 7.3 % |
Even after adjusting for higher selling expenses—reflecting a producer-heavy distribution model—Bay State writers posted one of the strongest combined performances in the country. Premiums grew to $20.5 billion, and every $100 of premium produced $8.60 in underwriting profit—an advantage of more than 10 points over the national average.
3. Line-by-line highlights for the Bay State
| Private Passenger Auto (Total) | 71.6 % | –3.2 % | 4.6 % | Countrywide frequency uptick tempered by stable bodily-injury severities; MA residual-market cession credits support profitability. |
| Commercial Auto (Total) | 59.8 % | +6.9 % | 11.3 % | Fleet-telematics adoption and disciplined underwriting offset medical-inflation headwinds. |
| Homeowners | 47.7 % | +16.2 % | 18.2 % | No hurricane landfalls; rate increases approved mid-year; water-damage losses lower than 10-year norm. |
| Workers’ Compensation | 53.7 % | +8.9 % | 12.2 % | Continuing benefit from safe-harbor reforms and favorable claim severity trends. |
| Other Liability (incl. Excess/Umbrella) | 46.3 % | +16.1 % | 15.0 % | Litigation financing less intense than in coastal peers; pricing momentum persists. |
What pops out?
- Homeowners profitability leaps off the page. A sub-50 % loss ratio in a weather-exposed line is exceptional. Carriers should bank surplus now; climate models still point to rising convective-storm volatility across New England.
- Commercial Auto’s 6.9 % underwriting margin contrasts dramatically with the national 9-point loss; local fleet books benefited from miles-driven caps in construction and seasonal delivery niches.
- Private Passenger Auto remains challenging but less so than nationally; the 71.6 % loss ratio shaved almost four points off the U.S. figure. However, underwriting is still in the red and reliant on investments to generate an overall 4.6 % return.
- Workers’ Compensation continues its post-reform glide path: premiums per payroll unit are sliding, but medical severities remain flat, and indemnity frequency is below pre-pandemic levels.
4. Macro Factors Behind Massachusetts Out-Performance
- Benign Cat Year – 2023 spared New England the convective-storm and wildfire losses that battered other regions.
- Disciplined Rate Filings – The Division of Insurance approved several mid-cycle homeowners and commercial-auto adjustments that reached earned premiums in Q4.
- Residual Market Stability – The Massachusetts Automobile Insurance Plan (MAIP) and FAIR Plan exposures shrank slightly, shifting profitable voluntary business back onto carrier books.
- Favorable Litigation Climate – Jury-award inflation has lagged the national pace; no nuclear verdicts hit carrier results during the calendar year.
5. Caveats and Context
- Calendar-year data blur accident-year realities. Large winter-storm losses booked in January 2024 will only appear in next year’s report.
- NAIC allocates some expenses by premium share, not actual state experience; high-expense lines such as warranty or inland marine may appear more—or less—profitable than insurer internal studies suggest.
- Investment gains exclude unrealized capital gains, understating the full contribution of rising bond yields (or masking equity drawdowns). Always read the methodology notes before drawing pricing conclusions.
6. What to Watch in 2024
- Auto Bodily-Injury Severities – Early ISO data show BI severity up 8 % through Q1; watch whether Massachusetts’ auto reforms can continue to tamp claims inflation.
- Coastal Property Reinsurance – June renewals signal double-digit ceded-premium increases; cedant share of cat risk may reverse 2023’s homeowners windfall.
- General Liability Social Inflation – Plaintiffs bar attention is turning to PFAS and construction defect suits; the “Other Liability” run of 16 % underwriting margins may be hard to repeat.
Final thoughts
For 2023, Massachusetts carriers enjoyed a top-quartile year, with a 12.5 % return on net worth that beat the national P&C average (7.3 %), though still shy of the 17.4 % posted by the broader Fortune-1000 industrial and service companies. The out-performance was broad-based—commercial auto, homeowners, CMP, and liability all posted double-digit margins—thanks to mild weather, stable litigation, and timely rate action.
But history says underwriting tailwinds can turn quickly. As the NAIC cautions, past profits “provide only approximations” and should be paired with granular, accident-year analytics before making pricing moves. Still, the 2023 numbers give Massachusetts insurers a welcome surplus cushion as they navigate the harder-market shoals of 2024.
Agency Checklists will continue tracking quarterly statements and the NAIC’s 2024 profitability update to see whether Bay State carriers can maintain their altitude—or if gravity begins to assert itself.
How to get the full report:
The NAIC’s 2023 Report on Profitability by Line by State spans 570 pages and is available to the public at no cost. Readers can download the PDF directly from the association’s website at https://content.naic.org/sites/default/files/publication-pbl-pb-profitability-line-state.pdf.
