Weiss Ratings


Property and Casualty Insurers' Profits Surge 189%
During First Half of 2003
Industry Cash Flow Increases 66%

JUPITER, Fla., December 3, 2003 — The nation's property and casualty insurers earned $15.6 billion during the first six months of 2003, representing a $10.2 billion, or 188.9 percent, jump over the same period in 2002, according to Weiss Ratings, Inc., the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds, and stocks.

Improved underwriting helped the industry reduce its underwriting loss to $2 billion in the second quarter of 2003, compared to the $11.3 billion loss reported a year ago. With the economy recovering and the upturn in the market, insurers' realized capital gains rose to $4.4 billion during the first half of 2003, compared to a $0.5 billion loss during the same period in 2002.

Insurers reporting the largest year-over-year increases in net income include:

Company

Headquarters

Weiss Safety Rating

Net Income (Loss)
($Mil)

2nd Qtr
2003

2nd Qtr
2002

$
Change

American Re-Insurance Co.

Princeton, N.J.

C-

427.9

(1,652.5)

2,080.4

National Fire & Marine Ins. Co.

Omaha, Neb.

B

477.3

(292.9)

770.2

Nationwide Mutual Ins. Co.

Columbus, Ohio

C+

454.1

(53.7)

507.8

Allstate Ins. Co.

Northbrook, Ill.

A-

1,168.4

678.9

489.5

State Farm Fire & Casualty Co.

Bloomington, Ill.

B-

(35.3)

(513.5)

478.2

Weiss Safety Rating: A=Excellent; B=Good; C=Fair; D=Weak; E=Very Weak

Industry Cash Flow Increases 66%

Property and casualty insurers reported a 66.1 percent increase in cash flow from operations, which surged to $29.9 billion at June 30, 2003, compared to $18 billion at June 30, 2002. Contributing to the increase in cash flow was a $20.2 billion, or 11.6 percent, jump in net premiums, which rose to $194.6 billion during the first half of 2003, compared to $174.4 billion during the same period in 2002. In addition, the industry's loss payments declined by $18.6 billion, or 14.5 percent, falling from $128.7 billion in the second quarter of 2002 to $110.1 billion in 2003.

"The industry is flush with cash at a time that is, arguably, the peak of the hard market, following years of rising premiums," commented Melissa Gannon, vice president of Weiss Ratings, Inc. "However, insurers should be prepared for the inevitable return to a soft market when competitive pressures lead to declining premiums and loose underwriting standards."

Property and casualty insurers reporting the largest year-over-year increases in cash flow from operations include:

Company

Headquarters

Weiss Safety Rating

Cash Flow from Operations ($Mil)

2nd Qtr 2003

2nd Qtr 2002

$ Change

Farmers Ins. Exchange

Los Angeles, Calif.

C

918.7

(197.0)

1,115.7

Allstate Ins. Co.

Northbrook, Ill.

A-

1,650.5

700.0

950.6

Universal Underwriters Ins. Co.

Overland Park, Kan.

C

6.6

(714.8)

721.4

Firemans Fund Ins. Co.

Novato, Calif.

C-

44.3

(610.5)

654.8

Nat'l Union Fire Ins. Co. of Pittsburgh

New York, N.Y.

B+

711.7

65.3

646.3

Weiss Safety Rating: A=Excellent; B=Good; C=Fair; D=Weak; E=Very Weak

Notable Upgrades and Downgrades

Among the 2,237 property and casualty insurers reviewed by Weiss, six companies were upgraded, while twenty were downgraded. Notable upgrades include:
  • Home-Owners Ins. Co. (Lansing, Mich.)
  • Protective Ins. Co. (Indianapolis, Ind.)
from A to A+
from A to A+
Notable downgrades include:
  • American Family Mutual Ins. Co. (Madison, Wis.)
  • Sumitomo Marine & Fire Ins. Co. of Amer. (New York, N.Y.)
from B+ to B
from B+ to B

The Weiss Safety Ratings are based on an analysis of a company's risk-adjusted capital, reserve adequacy, profitability, liquidity, and stability. The latter category combines a series of factors including asset growth, premium growth, strength of affiliate companies, and risk diversification.

Weiss issues safety ratings on more than 15,000 financial institutions, including insurance companies, banks, and brokerage firms. Weiss also rates the risk-adjusted performance of more than 12,000 mutual funds and more than 8,000 stocks. Weiss Ratings is the only major rating agency that receives no direct or indirect compensation from the companies it rates for issuing its ratings. Revenues are derived strictly from sales of its products to consumers, institutions, businesses, libraries, and governmental agencies.

Consumers needing more information on the financial safety of a specific company can purchase a rating and summary analysis for as little as $7.95 through www.WeissRatings.com, or starting at $15 by calling 800-289-9222.

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Note to Editors: National and state listings of strongest and weakest property and casualty insurers are available below.