Weiss Ratings


Property and Casualty Insurers Earn $32.3 Billion in 2003
Industry Reports $48 Billion Investment Gain

JUPITER, Fla., July 14, 2004 — Property and casualty insurers more than doubled their profits during 2003, earning $32.3 billion compared to the $13.5 billion reported 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.

Property and casualty insurers reporting the largest year-over-year increases in net income include:

Company Headquarters Weiss
Safety
Rating
Net Income (Loss) ($Mil)
4th Qtr
2003
4th Qtr
2002
$
Change
State Farm Mutual Auto Ins. Co. Bloomington, Ill. B+ 1,467.8 -1,994.4 3,462.2
American Re-Insurance Co. Princeton, N.J. C- 420.0 -1,778.6 2,198.6
Columbia Insurance Co. Omaha, Neb. B- 774.3 -624.1 1,398.4
Firemans Fund Ins. Co. Novato, Calif. C- 117.7 -1,171.7 1,289.3
Allstate Ins. Co. Northbrook, Ill. A- 2,712.5 1,433.6 1,278.9

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

Continued improvement in underwriting was responsible for property and casualty insurers' extraordinary performance as the industry dramatically reduced its underwriting loss to $2.9 billion in 2003, compared to the $28.2 billion loss reported a year ago.

"Escalating premiums have caused profits to soar, but improved underwriting performance is paramount to the industry's long-term financial strength," said Melissa Gannon, vice president of Weiss Ratings, Inc.

Industry Records $48 Billion Investment Gain; Capital and Surplus Surges

A strong performance by the stock market helped boost property and casualty insurers' investment portfolios, which reported a net investment gain of $47.8 billion compared to $46.4 in 2002. One component of the net investment gain, net realized capital gains, jumped 103 percent, as the industry reported earning $6.3 billion on the sale of investments in 2003 compared to only $3.1 billion in 2002.

Likewise, the rise in the equity market produced a $34.5 billion net change in unrealized gains for the industry, which contributed to a $71.6 billion, or 19.2 percent, increase in capital and surplus, from $373.2 billion at December 31, 2002, to $444.8 billion at December 31, 2003.

Insurers reporting the largest increases in capital and surplus were:

Company Headquarters Weiss
Safety
Rating
Capital & Surplus ($Bil)
4th Qtr
2003
4th Qtr
2002
$
Change
State Farm Mutual Auto Ins. Co. Bloomington, Ill. B+ 40.0 31.6 8.4
National Indemnity Co. Omaha, Neb. B+ 23.1 15.7 7.4
Allstate Ins. Co. Northbrook, Ill. A- 16.1 13.8 2.3
Columbia Ins. Co. Omaha, Neb. B- 6.2 4.0 2.2
Liberty Mutual Ins. Co. Boston, Mass. B 6.1 4.0 2.1

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

Notable Upgrades and Downgrades

Among the 2,480 property and casualty insurers reviewed by Weiss, 126 companies were upgraded, while 107 were downgraded. Notable upgrades include:

•Erie Insurance Exchange (Erie, Pa.) from C to B-
•Iowa Mutual Ins. Co. (De Witt, Iowa) from C- to C+
•Plateau Casualty Co. (Crossville, Tenn.) from D+ to C

Notable downgrades include:

•Atlantic Mutual Ins. Co. (New York, N.Y.) from C to D+
•Landmark American Ins. Co. (Englewood, Conn.) from B- to C
•Putnam Reinsurance Co. (New York, N.Y.) from B to C+

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 Ratings, Inc., reviews more than 8,000 stocks daily, including all those traded on the New York Stock Exchange, the American Stock Exchange, and Nasdaq. Weiss also issues investment ratings on more than 12,000 mutual funds, covering equity, fixed-income, and closed-end funds, and provides financial safety ratings on more than 15,000 financial institutions, including banks and insurance companies. It 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. Ratings and analyses, consumer financial and investment guides, and other products are available for purchase through www.weissratings.com or 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.

 

 


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