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Wow - Makes for quite a sober Auto Insurance Market read:
Late last year, State Farm’s chief executive broke the news that the auto giant would record the largest underwriting loss in its 100-year history for 2022. On Monday, the news became official with a huge number attached: $13 billion.
“We missed severity badly. We did not anticipate the inflationary pressures,” said State Farm CEO Michael Tipsord at the Property/Casualty Insurance Joint Industry Forum last year.
“In 2022, State Farm’s auto insurance companies reported record underwriting losses due to rapidly increasing claims severity and significant additions to prior accident year incurred claims,” State Farm reported in a media statement this week, without disclosing the magnitude of the prior-year reserve charges.
By the numbers, the auto companies recorded earned premium of $45.7 billion. Incurred claims and loss adjustment expenses were $48.4 billion and other underwriting expenses totaled $10.8 billion. While earned premiums were 10.1% higher in 2022 than 2021, the underwriting loss landed at an eye-popping $13.4 billion.
Even though other P/C lines—homeowners, commercial multiple peril and other lines—generated an underwriting profit of $849 million, the auto loss dominated results, with auto representing 61% of written premiums and the other P/C lines 37%.
State Farm’s 2021 auto underwriting loss—$3.5 billion—also paled by comparison to the staggering number booked for 2022.
In total, State Farm said that the P/C group of companies reported a combined underwriting loss of $13.2 billion on earned premium of $74.3 billion. The 2022 underwriting loss, combined with investment and other income of $4.9 billion, resulted in a P/C pre-tax operating loss of $8.3 billion compared to a $313 million loss reported in 2021 and the $4.5 billion profit reported in 2020.
Read the Rest of the Article from Insurance Journal about State Farms Historic Loss here.
Late last year, State Farm’s chief executive broke the news that the auto giant would record the largest underwriting loss in its 100-year history for 2022. On Monday, the news became official with a huge number attached: $13 billion.
“We missed severity badly. We did not anticipate the inflationary pressures,” said State Farm CEO Michael Tipsord at the Property/Casualty Insurance Joint Industry Forum last year.
“In 2022, State Farm’s auto insurance companies reported record underwriting losses due to rapidly increasing claims severity and significant additions to prior accident year incurred claims,” State Farm reported in a media statement this week, without disclosing the magnitude of the prior-year reserve charges.
By the numbers, the auto companies recorded earned premium of $45.7 billion. Incurred claims and loss adjustment expenses were $48.4 billion and other underwriting expenses totaled $10.8 billion. While earned premiums were 10.1% higher in 2022 than 2021, the underwriting loss landed at an eye-popping $13.4 billion.
Even though other P/C lines—homeowners, commercial multiple peril and other lines—generated an underwriting profit of $849 million, the auto loss dominated results, with auto representing 61% of written premiums and the other P/C lines 37%.
State Farm’s 2021 auto underwriting loss—$3.5 billion—also paled by comparison to the staggering number booked for 2022.
In total, State Farm said that the P/C group of companies reported a combined underwriting loss of $13.2 billion on earned premium of $74.3 billion. The 2022 underwriting loss, combined with investment and other income of $4.9 billion, resulted in a P/C pre-tax operating loss of $8.3 billion compared to a $313 million loss reported in 2021 and the $4.5 billion profit reported in 2020.
Read the Rest of the Article from Insurance Journal about State Farms Historic Loss here.
