Financial Situation of Auto Insurance Companies and Rates

by Cole Humphreys in Auto Insurance at March 6, 2015

When looking for auto insurance in Grand Prairie or Arlington it is good to know financial standings of the companies. Auto insurance rates are very volatile based on these factors. Recently, Liberty Mutual finished out the year with gains in written premium, net income and a better combined ratio. The company’s CEO and chairman, David Long, released LM’s 2014 results showing the insurer is on an upswing, guided by deliberate underwriting and proven investment results.

The Boston, -based property and casualty insurer attained more than $8.85 billion in consolidated net written premium for the quarter ending Dec. 31, up $95 million (1.1 percent) over the same period in 2013.
Cat. losses for the 2014 4th quarter raised to 53.5 percent to $155 million, or $54 million higher than the 2013 fourth quarter. They’re also higher for the year – at $1.6 billion, versus $1.26 billion in 2013. LM said the numbers stem from “severe thunderstorms” in the U.S., U.K., floods in Ireland, Central Europe and Canada, and a German hailstorm, among other catastrophic events.
Net income shows a $63 million jump versus the 2013 fourth quarter. In other words, that’s a 12.7 percent increase.
The consolidated combined ratio for the fourth quarter came in at 92.9, a 3.1 point improvement compared to the 2013 fourth quarter, take away catastrophes, net incurred losses attributable to prior years, and current accident year re-estimation considered. With all three elements included in the equation, the combined ratio was 93.5, a 6.6 point improvement over 2013’s Q4 number.
Also, LM said it produced more than $9.4 billion in revenues for the quarter ending Dec. 31, down $7 million from the same period in 2013. Considering that is a 0.1 percent downtick, year-by-year comparisons are essentially static.
For 2014 as a whole, Liberty Mutual generated $36.6 billion in revenue, 3.2 percent higher than in 2013. Net written premium landed at approximately $36.3 billion, a 3.3 percent jump over the previous year. Net income reached $1.8 billion, which was 5.2 percent higher than in 2013.
Liberty Mutual’s consolidated combined ratio, minus catastrophes and net incurred losses from prior years, came in at 92.8 for the year, 2.4 points better than in 2013. With catastrophes and net incurred losses factored in the number comes in at 97.5, a 2.2-point improvement versus 2013.

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