US homeowners industry posts big premium gains, loss ratio declines in Q1

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U.S. homeowners insurers grew premiums by double digits in the first quarter while also significantly improving their loss ratios, according to an S&P Global Market Intelligence analysis.

Industrywide premiums increased 10.72% year over year in the period, while the direct loss ratio declined by almost 18 percentage points.

Improvement across the board

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Liability direct premiums written for the largest U.S. homeowners insurers came in at $27.50 billion in the first quarter versus $24.84 billion a year earlier. The year-over-year premium change is based on homeowners liability premiums only for the first quarters of 2021 and 2022.

The direct loss ratio for the market segment improved year over year to 53.9% from 71.6%.

Big players post lowest loss ratios

Industry leader State Farm Mutual Automobile Insurance Co. recorded the second-lowest loss ratio among the 10-largest homeowners insurers, at just 49.0%. It trailed only Farmers Insurance Co. Inc.’s best-in-group loss ratio of 48.0%.

The Allstate Corp. recorded a loss ratio of 50.3% in the period, while Liberty Mutual, which writes the third-most U.S. homeowners premiums, had the worst loss ratio of the group, at 60.9%.

Allstate CEO Tom Wilson in the company’s latest annual report said margins in the homeowners line continue to be among the best in the industry and provided attractive returns to mitigate losses in auto insurance margins.

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Double-digit premium change

State Farm, Allstate and Liberty Mutual all posted double-digit premium increases year over year, logging premiums written of $5.06 billion, $2.40 billion and $2.00 billion, respectively.

Glenn Shapiro, president of Allstate property-liability, in a June 16 call extolled the company’s “pricing sophistication” in the homeowners line, saying that this was seen “pretty clearly this year” in the increased average premiums stemming from automatic price increases, which stemmed from higher home values and replacement costs.

“Product and pricing are inextricably intertwined,” Shapiro said.

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