“We are also very pleased with our continued execution in the marketplace, noting in particular that we once again achieved written rate gains across each of our segments. In Business Insurance, we continue to leverage our data and analytics to achieve targeted rate gains in order to drive profitability. Our results this quarter demonstrate our success in this strategy as our underlying combined ratio improved meaningfully. In Financial, Professional and International Insurance, renewal rate change improvements from recent quarters were driven by Management Liability, which reported rate gains of more than 6 percent. In Personal Insurance, we again achieved strong increases in renewal premium change, which includes rate as well as changes in exposure, across the segment, as well as targeted changes in terms and conditions within Agency Homeowners & Other.
“We remain committed to continuing to improve profitability through a strategy of actively, but selectively, seeking price increases and improved terms and conditions, given historically low interest rates and uncertain weather patterns,” concluded Fishman.
Third Quarter 2012 Consolidated Results
|($ in millions)||Three Months Ended September 30,|
|Underwriting gain (loss)||$||514||$||(289||)||$||327||$||(185||)|
Underwriting gain (loss) includes:
|Net favorable prior year reserve development||193||184||129||124|
|Catastrophes, net of reinsurance||(91||)||(606||)||(59||)||(394||)|
|Net investment income||722||690||578||561|
|Other, including interest expense||(64||)||(71||)||(38||)||(44||)|
|Net realized investment gains (losses)||(2||)||2||(3||)||1|
|Income before income taxes||$||1,170||$||332|
|GAAP combined ratio||90.3||%||104.5||%|
GAAP combined ratio excluding incremental impact of direct to consumer initiative
Impact on GAAP combined ratio
|Net favorable prior year reserve development||(3.4||)||pts||(3.3||)||pts|
|Catastrophes, net of reinsurance||1.6||pts||10.8||pts|
Operating income of $867 million after tax increased $535 million from the prior year quarter mostly due to a $512 million after-tax improvement in the underwriting results, reflecting lower catastrophe losses and higher underlying underwriting margins.