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Losses Spike for Allied Lines in NJ, NY in 2012

Source: BestWeek - Meg Green

Posted on 15 Mar 2013 by Neilson

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ClaimsMost of the largest allied lines writers in New York and New Jersey saw their adjusted loss ratios spike dramatically in 2012, according to insurance company annual data available in BestLink.

Allied lines are coverages written with property insurance, including glass, tornado, windstorm and hail and excess flood.

Nine of the top 10 largest allied lines writers in New York posted triple digit adjusted loss ratios, with seven of them north of 500. Only FM Global Group posted an adjusted loss ratio lower than 100, and FM's 3.26 is among the lowest in the industry.

The adjusted loss ratio is the measure of direct losses incurred divided by the difference between direct premiums earned and dividends to policyholders.

Nine of the top 10 allied line writers in New Jersey also posted triple-digit adjusted loss ratios for 2012, seven of which were north of 200, according to BestLink, A.M. Best's online financial system. Balboa, the seventh-largest writer, posted an adjusted loss ratio of 98.61, the lowest in the group for New Jersey.

For the entire United States, just three of the top 10 writers posted adjusted loss ratios greater than 100. Companies posted mixed results, some showing large improvements from 2011 while others saw their adjusted loss ratio widen. For instance, FM Global's adjusted loss ratio for allied lines improved to 26.91 in 2012 from 138.85 in 2011. American International Group's adjusted loss ratio widened to 238.34 from 139.86.

Travelers Group, the largest allied line writer in New York, saw its adjusted loss ratio widen in the state to 742.12 from 157.34 in 2011. In New Jersey, where it is the fourth-largest writer, the adjusted loss ratio rose to 219.25 from 172.82 in 2011.

Sandy produced the largest number of claim notices in Travelers' history, Jay S. Fishman, chairman, chief executive officer, said during the company's fourth-quarter earnings conference call.

However, the company's total U.S. adjusted loss ratio for its allied lines improved to 67.93 in 2012 from 111.04 in 2011, according to BestLink.

Assurant P&C Group, the largest allied lines writer in New Jersey, saw its adjusted loss ratio widen to 239.3 from 95.62. In New York, where it is the fourth-largest writer, its adjusted loss ratio jumped to 808.11 from 97.57 in 2011.

For the total United States, Assurant's adjusted loss ratio for allied lines rose to 86.86 from 60.89.

Sandy "was the largest flood event our business has experienced," Rob Pollock, Assurant's president and CEO, said during the company's fourth-quarter conference call.

Extreme weather-related catastrophes are continuing to drive home the importance of risk management (Best's News Service, Feb. 27, 2013).

Sandy made landfall on the evening of Oct. 29, just southwest of Atlantic City, N.J., as a post-tropical cyclone. Total insured damages from the storm are expected by RMS to be up to $25 billion, which is one of the largest industry estimates.


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