Commercial auto insurers record highest premiums and lowest combined ratio since 2017
The largest commercial auto insurers posted the lowest average combined ratio and highest combined direct premiums and net premiums in 2021 over the past five years, according to an S&P Global Market Intelligence analysis.
Premiums jump, combined ratios improve for many big names
Direct premiums written for the companies included in this analysis jumped to $53.90 billion; net premiums written increased to $46.53 billion. This represented a steady increase over the previous five years, from $36.11 billion for direct premiums written and $30.64 billion for net premiums written in 2017.
The momentum continued in the first quarter of 2022, net written premiums of The Travelers Cos. Inc. rose 11% year over year to $8.37 billion from $7.51 billion. The company’s commercial insurance segment recorded net premiums written of $4.50 billion, up 9% from $4.13 billion a year earlier, which, according to travellers, reflects strong variation and strong retention of renewal premiums, as well as higher levels of new business.
UBS analyst Brian Meredith sees strong premium growth at Travelers as a benefit to other commercial insurers, including Arch Capital Group Ltd., Axis Capital Holdings Ltd., The Hartford Financial Services Group Inc. and WR Berkley Corp.
On April 25, WR Berkley reported net premiums written of $2.41 billion for the first quarter, up from $2.05 billion a year earlier.
Farmers Insurance Group of Cos. posted the highest loss ratio and combined ratio of all commercial auto insurers in this analysis. State Farm Mutual Automobile Insurance Co. had the second-worst combined ratio at 118.1%, followed closely by The Allstate Corp. at 117.3%.
Industry combined ratio below 100% for the first time in at least 5 years
The average commercial auto insurance combined ratio improved to 98.7% in 2021, with more than half of the largest commercial auto insurers reporting profitability in the segment as they had ratios below 100%.
Despite some moderation in trade price trends over the past quarter, the hard market in most lines and the underlying improvement in trade line margin continues, Meredith wrote in a research note. The UBS analyst expects most commercial line insurers to continue to see expense ratio improvement through 2022 and 2023.
Progressive’s big premium lead
Almost all insurers in this analysis saw year-over-year increases in direct written premiums in 2021, with more than half seeing double-digit growth.
The Progressive Corp. remains the dominant player in commercial autos with the highest premiums and growth rate, to go along with the second lowest combined ratio among the largest insurers. Its net premiums written for the segment jumped 51% to $8.02 billion in 2021 from $5.32 billion a year earlier.
In a letter to shareholders, CEO Tricia Griffith said the commercial segment’s premium growth in 2021 alone nearly equaled that of the second-largest commercial auto insurer, based on 2020 statutory results.