Storm-related claims dampen carrier profits

The unseasonal weather in the past quarter hurt insurer profits—some to the tune of a 38% decrease in operating earnings.

Insurance News

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The extreme and unseasonal weather that plagued much of the country in the second quarter may be the culprit for depressed carrier profits.

Operating earnings for Allstate Corp. and Hartford Financial Services Group all fell over the last quarter, while MetLife Inc. edged up just slightly. The drops were expected, given last year’s comparatively benign weather, though Allstate performed better than analysts expected.  

The auto and home insurance giant posted a 16% decline in its operating earnings, falling to $445 million. Premiums for property-liability lines increased 5.5%, while pretax catastrophe costs grew 45% to $936 million.

The Hartford fared even worse, with a drop in operating earnings of 38%. That brings the commercial and individual P/C insurer to $144 million in operating earnings, blamed on higher cat losses as well as a decision to boost its asbestos and environmental reserves.

MetLife’s lackluster operating earnings gained 0.3%, reaching $1.62 billion. The carrier cited poor underwriting results in its US retail and group benefits business, while operating earnings in Asia also declined. MetLife’s overall income grew to $1.37 billion during the same period last year.

The losses follow a pattern of declines on bad weather, as P/C insurers’ profits slipped in 2014’s first quarter thanks to underwriting losses arising from the so-called “polar vortex.”

An overall drop in economic activity was also responsible, said Insurance Information Institute President Robert Hartwig in a special report.

 

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