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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.

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