Sept 11 (The following statement was released by the rating agency)
Fitch Ratings has published a new report that examines statutory financial performance for the U.S. property/casualty insurance industry and 20 of the largest market participants over the five-year period 2008-2012.
Statutory operating performance during this period was relatively weak compared to historical industry norms despite improved results in 2012. In general, soft market pricing conditions, large catastrophe losses and the 2008-2009 economic recession all contributed to a challenging operating environment over the study horizon.
The new report analyzes companies and the industry versus five unique measures that consider: underwriting performance, net profit margin, cash flow, return on capital, and internal capital formation. Companies are ranked by each operating ratio and in addition, an aggregate weighting of the ratios provides a comprehensive ranking of operating performance.
Rating analyses benefits from a comparison of longer term performance for an individual insurer versus the industry. The most successful underwriters tend to report solid results above peer averages in any market conditions. Chubb, Progressive, and Travelers reported the strongest performance over the period similar to their position in Fitch's past studies
Large mutual insurers gravitated toward the weaker performing underwriters over the most recent five-year period given a reduced focus on high profitability and less levered balance sheets. Although Fitch expects further improvement in profitability during 2013, shifts from lower tier performers to top tier performers are infrequent.
The report 'Statutory Performance Rankings (2008-2012)' is available on the Fitch web site at 'www.fitchratings.com.'