Lower cat losses boost results for U.S. homeowners’ insurance sector

Last year, the homeowners’ insurance sector in the United States will have had its first statutory underwriting profit since 2007, benefitting from a decline in natural catastrophe losses, among other factors, according to a new report from Fitch Ratings.

Increasing premium rates also benefitted the sector, according to Fitch. Its report is based on an analysis of homeowners’ results between 2011 and 2013 for four major, publicly-traded insurers, as an indicator of industry-wide results for 2013, which aren’t yet available.

The companies included in the analysis were Allstate Corp., Chubb Group, The Hartford Financial Services Group and the Travelers Companies.

Those four companies reported an aggregate homeowners’ combined ratio of 79.6% for full year 2013, substantially improved from 92.7% in 2012, according to Fitch.

The improvement is mainly because of the sharp decline in natural catastrophe losses, which accounted for 12.2% of earned premiums in 2013, and 22.8% in 2012, according to the firm.

“The group aggregate combined ratio, excluding catastrophe losses, was 67.4% in 2013, nearly 10 points better than the 2011 result, reflecting rising premium rates and stricter underwriting standards,” Fitch said.

“Fitch expects homeowners’ insurance prices to flatten, but still trend positively in 2014, promoting further ex-cat underwriting improvement,” the firm added.