Weiss Ratings


Property and Casualty Insurers Safely Positioned
to Weather Hurricane Losses
Five-fold surge in underwriting profits and 54% jump in net income
reported in second quarter

JUPITER, Fla., December 7, 2004 — Even with the nearly $21 billion of hurricane-related losses expected to be reflected in the third and fourth quarter results, the nation's property and casualty insurers are well-capitalized and safely positioned to recover without much difficulty, according to Weiss Ratings, Inc., the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds, and stocks. The industry posted impressive performance numbers during the second quarter of 2004, with a $9.2 billion net underwriting gain, representing a 560 percent jump over the $2.0 billion underwriting loss reported for the same period in 2003.

Property and casualty insurers reporting the largest improvements in underwriting performance include:

Company Headquarters Weiss
Safety
Rating
Capital
&
Surplus
($Bil)
Underwriting Gain (Loss)
($Mil)
2nd Qtr
2004
2nd Qtr
2003
$
Change
State Farm Mutual Auto Ins. Co. Bloomington, Ill. B+ 43.6 1,140.6 (1,081.6) 2,222.2
Allstate Ins. Co. Northbrook, Ill. A- 17.0 1,404.3 356.9 1,047.4
Hartford Fire Ins. Co. Hartford, Conn. B+ 8.6 2.7 (938.6) 941.4
State Farm Fire & Casualty Co. Bloomington, Ill. B- 5.5 526.6 (343.8) 870.4
Hartford Accident & Indemnity Co. Hartford, Conn. C+ 2.6 2.1 (739.4) 741.5

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

Net Income Jumps 53.8%

As the result of another solid underwriting performance by the industry, property and casualty insurers' earnings also climbed, jumping to $24 billion at June 30, 2004, a 53.8 percent increase over the $15.6 billion earned in the first six months of 2003.

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

Company Headquarters Weiss
Safety
Rating
Capital
&
Surplus
($Bil)
Net Income (Loss)
($Mil)
2nd Qtr
2004
2nd Qtr
2003
$
Change
State Farm Mutual Auto Ins. Co. Bloomington, Ill. B+ 43.6 2,024.6 (7.1) 2,031.7
State Farm Fire & Casualty Co. Bloomington, Ill. B- 5.5 910.3 (35.3) 945.6
Allstate Ins. Co. Northbrook, Ill. A- 17.0 2,011.9 1,168.3 843.6
National Indemnity Co. Omaha, Neb. B+ 24.7 1,167.4 675.8 491.6
Hartford Accident & Indemnity Co. Hartford, Conn. C+ 2.6 147.8 (239.9) 387.8

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

"Although hurricane losses will materially impact the industry's profits, very few insurers are expected to have problems meeting the needs of policyholders," said Melissa Gannon, vice president of Weiss Ratings, Inc.

Industry Capital and Surplus Surges

The industry's strong performance has also led to a $71.9 billion, or 18 percent, increase in capital and surplus, which surged from $398.6 billion at June 30, 2003 to $470.5 billion at June 30, 2004.

Property and casualty insurers reporting the largest increases in capital and surplus were:

Company Headquarters Weiss
Safety
Rating
Total
Assets
($Bil)
Capital & Surplus ($Bil)
2nd Qtr
2004
2nd Qtr
2003
$
Change
State Farm Mutual Auto Ins. Co. Bloomington, Ill. B+ 81.7 43.6 34.1 9.5
National Indemnity Co. Omaha, Neb. B+ 47.7 24.7 18.0 6.7
Hartford Fire Ins. Co. Hartford, Conn. B+ 18.4 8.6 6.2 2.3
Liberty Mutual Ins. Co. Boston, Mass. B 23.7 6.5 4.3 2.2
Allstate Ins. Co. Northbrook, Ill. A- 44.3 17.0 14.8 2.2

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

"The substantial growth in capital and surplus is another indicator that the industry can withstand the hurricane losses of this past summer," added Gannon.

Notable Upgrades and Downgrades

Among the 2,246 property and casualty insurers reviewed by Weiss, eight companies were upgraded, while 14 were downgraded. Notable upgrades include:

• Assoc. Industries of MA Mutual Ins. (Burlington, Mass.) from D+ to C-
• Frankenmuth Mutual Ins. Co. (Frankenmuth, Mich.) from A- to A
• Prime Ins. Syndicate Inc. (Chicago, Ill.) from D to C-

Notable downgrades include:

• Athena Assurance Co. (St. Paul, Minn.) from B- to C
• Converium Reins. North America Inc. (Stamford, Conn.) from C- to D
• St. Paul Medical Liability Ins. Co. (St. Paul, Minn.) from B- to C

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 and custom research solutions 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.

 

# # #

 

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

 

 


15430 Endeavour Drive, Jupiter, FL 33478 · (561) 627-3300 · www.weissratings.com