To recap the issues raised during Wednesday’s conference call, here are some of the key media stories, and the messages we’re conveying.
P/C insurance industry financials show marked improvement in first nine months of 2010 compared to last year; investment gains are a primary reason:
Private U.S. property/casualty (P/C) insurers’ net income after taxes rose to $26.7 billion through nine-months 2010 from $16.4 billion through nine-months 2009, with insurers’ annualized rate of return on average policyholders’ surplus — a key measure of overall profitability — increasing to 6.7 percent from 4.6 percent. Reflecting insurers’ $26.7 billion in net income and other developments in the first nine months of 2010, policyholders’ surplus — insurers’ net worth measured according to Statutory Accounting Principles — rose $33.5 billion, or 6.5 percent, to $544.8 billion at September 30, 2010, from $511.4 billion at year-end 2009, according to a report issued this week by ISO, PCI, and the I.I.I.
I.I.I.’s president offers written commentary, video analysis on P/C insurance industry financials:
The property/casualty (P/C) insurance industry reported an annualized statutory rate of return on average surplus of 6.7 percent through the first nine months of 2010, much improved from 4.6 percent from the same period in recession-battered 2009, I.I.I. president Robert Hartwig noted, in his commentary and video on the industry financials. This year’s nine-month result also compares favorably with the full-year rates of return of 5.8 percent in 2009 and 0.6 percent in 2008. It is now all but certain that the P/C insurance industry will record positive growth in 2010 — the first since 2006. While underwriting losses deteriorated marginally, the industry is still operating on a “breakeven” basis with a combined ratio of 99.7, after excluding mortgage and financial guaranty insurers. As has been the case since mid-2009, virtually all of the improvement in the industry’s financial performance came from a massive reversal in asset values, which allowed the industry to realize $4.4 billion in capital gains during the first nine months of 2010 compared to $9.6 billion realized capital losses over the same time period a year earlier.
Bloomberg news wire reports Insurance Sales Post Biggest Advance in 16 Quarters on Auto, Home Coverage:
Reporter Noah Buhayer’s Tuesday, December 21, article cites the ISO/PCI/I.I.I. industry financials report for the first nine months of 2010.California’s governor declares state of emergency in six counties due to heavy rains:
Governor Schwarzenegger declared a state of emergency in Kern, Orange, Riverside, San Bernardino, San Luis Obispo and Tulare counties. The Los Angeles Times has been offering a running commentary on the severe weather’s impact throughout the week. In addition, The Weather Channel posted footage of water rushing through the streets of Laguna Beach, California and other incidents arising out of California’s record-setting rainfall.
Texas-based company which buys life insurance policies from individuals, and then sells them to investors, examined on The Wall Street Journal’s front page:
Life Partners, a rapidly growing company based in Waco, Texas, has received large fees for arranging to buy life insurance policies from individuals and selling fractional interests to investors who collect the death benefits when the insured people die, according to this Tuesday, December 21, Wall Street Journal article (subscription require). But the WSJ’s investigation also discovered that Life Partners often significantly underestimated the life expectations of the insured. Life expectancies are crucial to the business because when the insured’s life span is underestimated, the article notes, not only is the policy payout delayed but the investors must also continue paying premiums as long as the insured lives. Moreover, the WSJ found that many investors failed to see the 10-15 percent yearly returns mentioned in promotional materials from Life Partners. Life Partners ranked highest on Fortune magazine’s 2009 list of the most rapidly growing companies in the U.S.
I.I.I.’s divorce/insurance release is appearing in several blogs.
Credit score-related websites have posted the I.I.I.’s content. Two examples: (http://articlesreloaded.com/finance/credit/divorce-can-affect-credit-scores-and-personal-finances/) (http://www.websitepoint.co.cc/divorce-can-affect-credit-scores-and-personal-finances/)
I.I.I. posts updated online guide covering all aspects of the commercial insurance sector:
Released on Monday, December 20, the guide includes lines of business, types of policies, leading players, distribution, alternative markets and surplus lines. The commercial insurance content compliments Insuring Your Business, I.I.I.’s guide for small businesses.
Kansas Congressman introduces the Federal License for Reinsurers Act of 2010:
Rep. Dennis Moore (R-Kansas) issued a news release about the legislation on Thursday, December 16.
Florida’s outgoing chief financial officer says Governor Crist should have signed into law a June 2010 property insurance reform measure:
CFO Alex Sink, who leaves office in the first week of January 2011, said that Governor Charlie Crist should not have vetoed SB 2044 a few months ago, and that CFO-elect Jeff Atwater should strengthen the office of Insurance Consumer Advocate, in a Friday, December 17, interview with AM Best (subscription required).
Texas judge sets stage for release of information regarding legal fees the Texas Windstorm Insurance Association (TWIA) paid as part of Hurricane Ike settlement:
Galveston, Texas, District Judge Susan Criss’ has lifted a temporary injunction that barred TWIA from releasing additional information on the $189 million in settlements with about 2,400 homeowners whose properties were seriously damaged by Hurricane Ike in September 2008, according to this Thursday, December 16, Austin American-Statesman article. The injunction was issued in October 2010 at the request of lawyer Steve Mostyn, who represented many of the homeowners at issue. Mostyn argued that release of the information regarding the monies TWIA paid to the Ike claimants’ attorneys would violate state confidentiality laws. The injunction was lifted after Mostyn and TWIA’s lawyers agreed to redact identifying information and exclude mediation-related documents from the disclosure.
Alabama’s governor-elect says he will keep Jim Ridling as the state’s insurance commissioner:
Governor-elect Robert Bentley says he’ll keep Commissioner Ridling, an appointee of outgoing Governor Robert Riley, in office, according to Friday, December 17, article in the Mobile Press-Register. The announcement disappointed Stan Virden, an Alabama consumer advocate who thinks Commissioner Ridling is too close to insurers, the story notes.
Louisiana federal judge affirms that losses related to defective drywall are not covered under a standard homeowners insurance policy:
Standard h/o policies do not cover damages to homes or personal property caused by corrosive Chinese drywall, and insurers do not have to cover relocation costs for people whose homes contain the defective product, according to U.S. District Court Judge Eldon Fallon. The ruling was the result of motions brought by 10 insurers in consolidated litigation over defective drywall and is the most significant insurance ruling on the issue in Louisiana so far, according to this Friday, December 17, article in the New Orleans Times-Picayune.
Federal appeals court rejects $21 million Katrina-related settlement that had been reached last year in Louisiana:
The Associated Press’ Mike Kunzelman filed a story earlier this week on a three-judge appeals panel’s decision to reject an insurance settlement approved last year by U.S. District Court Judge Stanwood Duval in New Orleans. The appeals court’s argument: Judge Duval erred by approving the $21 million Katrina-related claim without any assurances that attorneys’ costs and administrative fees wouldn’t cannibalize the entire $21 millions. The class-action lawsuits were filed against three Louisiana levee boards and their insurer, St. Paul Fire & Marine Insurance Co.
Tulsa, Oklahoma, considers imposing fees on at-fault motorists involved in accidents that require a city fire department response:
Under a plan being considered by Tulsa’s City Council, drivers would be billed $200 per fire truck needed, Tulsa World reports. The cost of these responses is usually covered by insurance, according to the Tulsa World article. Two city council members, G.T. Byrum and Chris Trail, argued that the city already goes after drivers’ insurance policies through third-party collectors for collision damage to municipal property. The proposal is expected to be discussed and voted on in early 2011, the article states.New York State levies $2 million fine against three insurance brokers affiliate with Citigroup:
Citicorp Insurance Agency Inc., Citicorp Investment Services and SBHU Life AgencyInc. settled with the New York State Insurance Department (NYSID) after the NYSID found that the three affiliates violated regulations related to sales practices involving life insurance and annuities, according to this Wednesday, December 22, Wall Street Journal print edition article (subscription required)Larry Light is no longer with Bloomberg News:
Light, who joined Bloomberg’s insurance team only a few months ago, is no longer with the organization, according to Bloomberg reporter Andrew Frye. Frye said Bloomberg was in the market for a full-time insurance reporter in their New York City office, too.
