The following are 2016 results for four Massachusetts-based insurers: Liberty Mutual, MassMutual, Safety Insurance, and The Hanover Insurance Group. Also included are the results for MAPFRE, an international insurer with a large presence in the Massachusetts personal automobile insurance market. The five companies’ results appear in alphabetical order
Liberty Mutual’s 2016 results
Liberty Mutual Holding Company Inc. and its subsidiaries reported net income of $1.006 billion for the twelve months that ended on December 31, 2016. The results show an increase of $492 million versus the same time period in 2015. Including $63 million of net income attributable to non-controlling interest in both periods, consolidated net income for the twelve months ended December 31, 2016 was $1.069 billion.
“Fourth quarter operating income was $359 million, down from $525 million in the prior year, primarily due to elevated loss trends within U.S. personal and commercial auto liability,” said David H. Long, Liberty Mutual Insurance Chairman and CEO. “Full year net income nearly doubled to just over $1 billion despite higher catastrophe losses and the auto trends. Growth remained healthy, with net written premium up 6 percent in the quarter and 3.5 percent for the year.”
Some highlights of Liberty Mutual’s 2016 results were:
- Net written premium for the twelve months ended December 31, 2016 was $35.714 billion, an increase of $1.181 billion or 3.4% over the same period in 2015.
- Net operating income before partnerships, LLC and other equity method income (loss) for the twelve months ended December 31, 2016 was $1.245 billion, a decrease of $217 million or 14.8% from the same period in 2015.
- Consolidated net income from continuing operations for the twelve months ended December 31, 2016 was $1.069 billion, a decrease of $374 million or 25.9% from the same period in 2015.
- The consolidated combined ratio before catastrophes and net incurred losses attributable to prior years for the twelve months ended December 31, 2016 was 93.4%, an improvement of 1.2 points over the same period in 2015. 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, 2016 increased 0.6 points to 98.4%.
MAPFRE’s 2016 results in euros (1 euro equals $1.05)
MAPFRE’s net profit for 2016 increased by 9.4 percent to 775 million euros, in a year marked by good performances in its three main markets (Spain, Brazil and the United States) and with exceptional results from MAPFRE RE. The Group’s revenue amounted to 27.092 billion euros, representing a 1.5 percent increase over the previous year, while premiums increased by 2.2 percent to 22.813 billion euros.
At the close of 2016, equity stood at 11.444 billion euros, a 10 percent increase on the previous year, due to good market performance and the positive development of the main currencies (the Brazilian real and the US dollar). Shareholders’ equity increased by 6.4 percent to 9.127 billion euros, and total assets grew by 7 percent, standing at 67.882 billion euros at year-end.
The Group’s combined ratio decreased by 1.2 points in 2016 to 97.4 percent.
The North America Regional Insurance Unit posted premium volume for 2016 of 2.9 billion euros, which represents an increase of 4.5 percent.
United States business taken alone, however, showed a growth of 7.2 percent (measured in dollars rather than euros), reaching 2.539 billion euros, with a very significant improvement in claim levels, which fell by almost six percentage points to 77.5 percent. The North America Regional Area contributes 11.7 percent of the Worldwide Insurance Group’s premiums.
- MAPFRE’s revenue increased 1.5 percent to 27.092 billion euros, and premiums exceed 22,813 billion, a 2.2 percent increase.
- Excluding extraordinary items for both 2015 and 2016, net earnings would have grown by 41 percent.
- The Group’s combined ratio improves by more than one point, to 97.4 percent, while in Spain the improvement is more marked, at 95 percent.
- Strong business growth in Spain (+7.1 percent) and in the United States (+6.2 percent).
- An excellent year for MAPFRE RE, increasing profits by 22 percent.
- The Solvency II ratio stands at 200 percent, with 93 percent of maximum quality capital (TIER 1).
MassMutual has record-breaking year in sales for 2016
Massachusetts Mutual Life Insurance Company (MassMutual) reported strong consolidated statutory financial results for 2016, including record sales in key businesses and abundant levels of total adjusted capital, surplus and assets under management (AUM).
For the year ended December 31, 2016, sales of whole life insurance were $657 million, up 35 percent from 2015. It was the 11th consecutive year of record growth, capping a decade in which sales have grown an average of 15 percent annually, increasing four-fold and more than double the industry pace. This performance in 2016 helped drive total sales of life insurance to $709 million, up 28 percent over 2015–the fifth straight year total life insurance sales reached an all-time high. And sales of retirement plans climbed 15 percent to $11.4 billion, reaching a record level for the fourth consecutive year.
The company’s momentum was amplified by the July acquisition of nearly 4,000 advisors from the MetLife Premier Client Group (MPCG)–increasing MassMutual’s advisor force by over 60 percent by year-end to over 9,500, the most in the company’s history. The company also continued to introduce new and emerging online distribution channels to better reach traditionally underserved markets, including the middle class, millennial and Latino communities.
MassMutual’s strong sales performance, along with contributions from its mix of other businesses, helped the company achieve revenue of $29.6 billion, an increase over the prior year, while premium and other deposits remained relatively unchanged at $44.4 billion.
Two key measures of financial strength–statutory surplus and total adjusted capital–remained at high levels, at $15.4 billion and $17.3 billion, respectively.
With the strong financial performance from MassMutual’s domestic insurance and retirement business, MassMutual’s asset management affiliates–Barings and OppenheimerFunds, Inc.–and MassMutual International, the holding company which owns its international insurance subsidiaries, helped MassMutual reach $675 billion in AUM, up from $642 billion at the end of 2015.
In November, the company’s Board of Directors approved an estimated 2017 dividend payout of $1.6 billion5. The 2017 payout reflects a dividend interest rate of 6.70 percent6 for eligible participating life insurance policies, highest among the company’s mutual competitors.
Net gain from operations before policyowner dividends and taxes–the company’s primary earnings measure as a mutual company–was $1.6 billion, compared to $2.1 billion in 2015. This change and the year-over-year decline in statutory net income to $70 million are attributed primarily to both the cost associated with acquiring MPCG and lower investment yields.
MassMutual was also recognized as a World’s Most Ethical Company for the third straight year by the Ethisphere Institute, and achieved a perfect score of 100 on the Human Rights Campaign Corporate Equality Index for the eighth time in the past decade.
Safety Insurance Group, Inc. 2016 results
Net income for the year ended December 31, 2016 was $64.6 million, or $4.27 per diluted share, compared to a net loss of $13.9 million, or $0.93 per diluted share, for the comparable 2015 period. Safety’s book value per share increased to $44.27 at December 31, 2016 from $42.70 at December 31, 2015. Safety paid $0.70 per share in dividends to investors during the quarters ended December 31, 2016 and December 31, 2015, respectively. Safety paid $2.80 per share in dividends to investors during the years ended December 31, 2016 and December 31, 2015, respectively.
Direct written premiums for the year ended December 31, 2016 increased by $25.9 million, or 3.3%, to $811.6 million from $785.7 million for the comparable 2015 period. The 2016 increase occurred primarily in Safety’s homeowners and commercial automobile lines of business, which experienced increases in average written premium per exposure of 7.4% and 7.5% respectively.
Net written premiums for the year ended December 31, 2016 increased by $20.3 million, or 2.7%, to $766.5 million from $746.2 million for the comparable 2015 period. Net earned premiums for the year ended December 31, 2016 increased by $17.6 million, or 2.4%, to $755.8 million from $738.2 million for the comparable 2015 period. For the year ended December 31, 2016, loss and loss adjustment expenses incurred decreased by $119.2 million, or 19.4%, to $493.4 million from $612.6 million for the comparable 2015 period.
Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the year ended December 31, 2016 were 65.3%, 30.8%, and 96.1%, respectively, compared to 83.0%, 29.0%, and 112.0%, respectively, for the comparable 2015 period. Loss, expense and combined ratios for the year ended December 31, 2015 were affected by the highest recorded snowfall totals in Massachusetts history.
Net investment income for the year ended December 31, 2016 decreased by $2.1 million, or 5.2%, to $38.4 million from $40.5 million for the comparable 2015 period. The decrease results from changes in the average invested asset balance because of investment proceeds used in the payment of claims resulting from the 2015 winter events and increases in fixed maturity amortization.
The Hanover Insurance Group’s 2016 results
Net income for the full year of 2016 was $155.1 million, compares to $331.5 million in 2015. Operating income before taxes and interest expense was $322.8 million for the full year of 2016, reflective of a combined ratio of 98.6%. The current accident year combined ratio, excluding catastrophe losses, was 92.9%, compared to 93.8% in the prior year. This was driven by improved current accident year loss ratios in Commercial and Personal Lines, partially offset by a higher current accident year loss ratio at Chaucer.
Commercial Lines operating income before taxes was $35.9 million, which included $70.1 million, or 3.0 points, of catastrophe losses, and $223.0 million, or 9.6 points, of net unfavorable reserve development. In 2015, Commercial Lines operating income before taxes was $143.3 million, which included $88.7 million, or 4.0 points, of catastrophe losses, and $45.2 million, or 2.0 points, of net unfavorable reserve development. The Commercial Lines current accident year combined ratio, excluding catastrophe losses), improved by 1.9 points to 92.5%, compared to 94.4% in the prior year, driven by better loss experience, primarily due to pricing and disciplined underwriting actions.
Personal Lines operating income before taxes was $178.4 million, which included $47.0 million, or 3.2 points, of catastrophe losses, and $4.3 million, or 0.3 points, of net unfavorable reserve development. In 2015, Personal Lines operating income before taxes was $149.3 million, which included $75.8 million, or 5.3 points, of catastrophe losses, and $19.7 million, or 1.4 points, of net favorable reserve development. Personal Lines current accident year combined ratio, excluding catastrophe losses, improved by 1.5 points to 88.8%, compared to 90.3% in the prior year, driven by lower non-catastrophe weather losses in the homeowners line, and earned rate increases, partially offset by higher agency performance-based compensation, consistent with strong results.
Total net premiums written were $4.7 billion in 2016, up 1.6% from 2015, excluding the effect of the UK motor sale on June 30, 2015. This was driven by higher domestic net premiums written, which increased by 4.2% in 2016, primarily driven by pricing and retention increases in both Commercial and Personal Lines, and new business growth in Personal Lines.
- Combined ratio of 98.6% for the full year, 2016, including 1.4 and 2.7 points of catastrophe losses and 12.3 and 3.0 points of unfavorable prior-year development, respectively
- Current accident year combined ratio, excluding catastrophes, of 92.9% in the full year, improved from 94.3% and 93.8%, respectively
- Net premiums written up 1.6% for the full year, excluding the impact of the UK motor sale on June 30, 2015
- Continued price increases in Commercial and Personal Lines
- Net investment income of $279.4 million for the year, consistent with full year 2015
- Book value per share of $67.40, up 1.8% from December 31, 2015; book value per share excluding net unrealized gains on investments of $63.01, up 0.5%
- During 2016, repurchased approximately 1.3 million shares of common stock for $105.6 million, at an average price of $80.58 per share
- On December 6, 2016, the Board of Directors increased the quarterly dividend on common shares by 9%, to $0.50 per common share.
