Berkshire Hathaway Insurance Group last year in New York posted its highest private passenger automobile adjusted loss ratio in at least a decade, while the company in New Jersey had a below-average experience for the third straight year, according to annual statement information available in BestLink, A.M. Best Co.'s online financial system.
Berkshire, which owns direct auto insurer Geico, had an overall adjusted loss ratio of 48.61 in New Jersey in 2012 and 81.7 in New York. The company in both states had record-high adjusted loss ratios for private passenger auto physical damage, but lower figures in the significantly larger liability portion of private passenger auto, according to BestLink. The adjusted loss ratio measures direct losses incurred divided by the difference between direct premiums earned and dividends.
In his annual letter to shareholders, Berkshire Chairman Warren E. Buffett singled out Hurricane Sandy as having a significant impact on Geico. Sandy racked up more than three times the loss that 2005's Hurricane Katrina inflicted on the insurer. The company insured nearly 47,000 vehicles that were destroyed or damaged by the storm, Buffett wrote. Geico had about $490 million in losses from Sandy, net of estimated salvage, the company reported in an annual regulatory filing.
Auto writers in New York and New Jersey had a more difficult time in 2012 than in previous years with the physical damage portion of private passenger auto because of Sandy. The private passenger auto physical damage average adjusted loss ratio in New Jersey is currently 81.38 and 101.44 in New York, according to BestLink. Berkshire in 2012 in New York for the first time in a decade had a private passenger auto physical damage adjusted loss ratio above 100 it was 113.2 in 2012.
While physical damage loss ratio was higher than average for Berkshire in 2012, the company reported a record-low liability adjusted loss ratio in New Jersey, which finished the year at 33.85 nearly half the market average of 62.79. The company finished with a liability adjusted loss ratio of 66.36 in New York, which is slightly below its five-year average, according to BestLink.
Berkshire is the largest writer of auto insurance in both states and has been consistently growing its direct premiums in both markets for at least the past five years. The company topped $1 billion direct premiums written in New Jersey for the first time in 2012 to finish the year at $1.035 billion, according to BestLink. It had 2012 private passenger auto direct premiums of $3 billion in New York.
Geico companies currently have a Best's Financial Strength Rating of A++ (Superior). The afternoon of March 25 shares of Berkshire Hathaway Inc. were trading at $102.23, down 0.33% from the previous close.