Operating income was $237 million after-tax, compared to an operating loss of $114 million after-tax in the prior year quarter, primarily reflecting lower catastrophe losses.
- The GAAP combined ratio improved 28.3 points to 86.9% due to lower catastrophe losses (30.0 points) and slightly higher net favorable prior year reserve development (0.2 points), partially offset by lower underlying underwriting margins (1.9 points).
- Net favorable prior year reserve development primarily resulted from better than expected loss experience in Homeowners & Other for catastrophe losses incurred in accident year 2012 and liability losses for accident years 2009 through 2012.
- The underlying GAAP combined ratio increased 1.9 points to 88.8% primarily resulting from higher levels of non-catastrophe weather-related losses and non-weather related property losses as compared to a particularly low level of these losses in the prior year quarter, partially offset by earned rate increases exceeding loss cost trends in both Automobile and Homeowners & Other.
Personal Insurance net written premiums of $1.717 billion decreased 4%. Renewal premium change remained strong, and retention rates increased from recent quarters. New business was higher than the prior year quarter due in part to the company’s new auto product, Quantum 2.0, which was introduced in 18 states by year-end.
Full Year 2013 Results(All comparisons vs. full year 2012, unless noted otherwise) Operating income of $838 million after-tax increased $621 million, primarily reflecting improved underwriting results driven by lower catastrophe losses, a higher underlying underwriting gain and higher net favorable prior year reserve development, partially offset by lower net investment income. Underwriting results
- The GAAP combined ratio improved 13.0 points to 88.9% due to lower catastrophe losses (10.0 points), higher underlying underwriting margins (2.5 points) and higher net favorable prior year reserve development (0.5 points).
- Net favorable prior year reserve development was primarily driven by the same factors discussed above for the fourth quarter, as well as better than expected loss experience in Homeowners & Other for accident years 2011 and 2012 for non-catastrophe weather-related losses and non-weather related losses.
- The underlying GAAP combined ratio improved 2.5 points to 88.3%, primarily resulting from earned rate increases exceeding loss cost trends in both Automobile and Homeowners & Other, and lower non-catastrophe weather-related losses.
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