This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Despite Sandy, Insurers Keep Improving During 2013

"There is a sustained trend toward moderate rate increases, that has actually been in place for two to three years," Hartwig says, adding that the main factor in the rise of insurance premium rates is the pressure on earnings from the Federal Reserve's "extraordinary efforts to keep interest rates low."

A P&C insurer's second largest source of revenue is usually its investment portfolio. With the Fed keeping the short-term federal funds rate in a range of zero to 0.25% since late 2008 and continuing making large bond purchases in an effort to hold down long-term interest rates, "an insurer will need to improve its underwriting performance to achieve the same [return on equity]," according to Hartwig.

One area of commercial P&C insurance that has seen a major underwriting profitability improvement is workers compensation coverage, which has seen "fairly substantial rate increases in the range of 8% to 10% typically," according to Hartwig.

"We have a moderation of underling claim cost trends," he says, as "the moderation we have seen across the economy for inflation associated with medical services, has pushed down the pace at risk claims costs are increasing, relative to five or 10 years ago."

At the same time, there has been a decline in workplace accident claims in the United States, despite the addition of "half a million manufacturing jobs over the past three years," according to Hartwig.

Here's a quick review of earnings and underwriting results for the first half or first three quarters of 2013, depending on the insurers' reporting schedules, as well as stock-price multiples for the same group of five P&C insurers, we looked at just before Sandy hit one year ago:

Berkshire Hathaway

For its P&C insurance subsidiaries, Berkshire Hathaway (BRK.B) reported first-half 2013 underwriting profits of $1.421 billion, improving from $673 million during the first half of 2012.

With so many non-insurance subsidiaries, Berkshire Hathaway's overall earnings performance can't be compared to the other companies listed here. But the company's net earnings attributable to common shareholders increased to $9.433 Billion, or $5,740 per Class A share, during the first half of 3013, from $6.353 billion, or $3,847 a share, a year earlier. Class B earnings-per-share increased to $3.83 during the first half from $2.56 a year earlier.
2 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ALL $64.67 -0.43%
AIG $55.52 -0.56%
CB $117.02 -0.15%
TRV $109.32 0.17%
AAPL $93.23 -1.70%


Chart of I:DJI
DOW 17,713.31 -117.45 -0.66%
S&P 500 2,054.43 -21.38 -1.03%
NASDAQ 4,750.5750 -54.7160 -1.14%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs