State Farm posts worst HO loss ratio since 2011; Peers Recover: S&P

State Farm was the only one of the 10 major players in the home insurance market to report a weaker second-quarter loss rate for the line than in 2023, according to a new analysis.

The outlier came even as State Farm, like its competitors in the space, saw a double-digit jump in premiums, according to S&P Global Market Intelligence.

S&P GMI provided second-quarter loss rate, premium growth and market share data for 10 large homeowner insurers and the U.S. home/mortgage industry in a new analysis this week (“Premiums up, rates down fuels Q2 solid for US homeowner insurers” |.S&P Global Market Intelligence) reported that the second-quarter direct loss ratio fell 12 points to 79.1, while industry direct written premiums rose. by 13.6%, up to 46.2 billion dollars.

State Farm’s direct written premiums in the second quarter rose 16.1% year-over-year to $8.4 billion, solidifying the carrier’s position as the nation’s largest homeowner insurer, with a share of 18% market. But State Farm’s loss ratio went in the wrong direction, rising nearly 12 points to 94.8 in the second quarter of 2024, S&P GMI reported.

In contrast, Allstate, with a 9% market share, saw a 28.1 point decline in its loss ratio, which reached 72.8 in the second quarter of 2024, compared to 100.9 in the second quarter from 2023. Allstate’s direct premiums rose 13.7% to just over $4 billion this quarter.

S&P GMI principal research analyst Tim Zawacki said State Farm’s sharp rise in homeowner losses was largely attributable to the quarter’s severe weather, and noted that storm-related losses fueled the worst results of State Farm’s underwriting in a second quarter in 13 years.

State Farm posted consolidated underwriting losses totaling $4.4 billion, compared with $3.9 billion in the second quarter of 2023, according to Zawacki, the largest second-quarter underwriting loss since 2011 , after adjusting for inflation.

Despite several severe weather outbreaks in the quarter, particularly in the Midwest and South, the other nine insurers surveyed by S&P GMI saw their loss ratios improve anywhere from 5.1 points (from Chubb) to 28.1 points ( for Allstate).

Including Allstate, six companies posted double-digit percentage improvements compared to the second quarter of 2023. Among them was USAA, which improved 19.5 points to 93, down from 112.5 in the second quarter of 2023. The passenger loss rate improved 17.8 points to 86.1. compared to 103.9 in the second quarter of 2023.

None of the Big 10 insurers reported a loss ratio above 100 for the second quarter of 2014, while half reported in the second quarter of 2023.

Focusing on the top line, nine of the 10 companies included in the analysis saw a year-over-year improvement in direct written premiums, six by double digits. Erie Insurance Exchange, a subsidiary of Erie Indemnity Co. and American Family Insurance Co. had the largest increases at 27.5% and 25.1%, respectively, followed by USAA at 16.2%.

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