AM Best: US Mutual Insurers Resilient Despite Perpetual Volatility

U.S. P/C Mutual Insurers Rely on Investment Income Amid Underwriting Challenges

U.S. property/casualty (P/C) mutual insurance companies have relied on investment income to counterbalance the weather-related challenges driving underwriting volatility, according to a new AM Best report.

The report, “US Property/Casualty Mutual Insurers Resilient Despite Perpetual Volatility,” highlights the pressures from continued inflation and severe weather-related activity in 2023, which pushed pure losses up by nearly 15% compared to the prior year. P/C mutuals recorded an underwriting loss of $36.6 billion in 2023, a 17% increase over 2022.

Despite these underwriting losses, net investment income of $23.4 billion in 2023—a 26% rise over 2022—helped offset the financial strain. However, insurers continue to face challenges from rising reinsurance costs and regulatory delays or resistance to rate increases.

“Many insurers are receiving rate increases, but there has been pushback,” said Lauren Magro, financial analyst at AM Best, noting that state insurance regulatory regimes differ in their conservatism, which can lead to delays in rate approvals and implementations.

Mutual insurers saw significant growth in gross premiums written (GPW) since 2021, spurred by rising reinsurance costs and inflationary pressures. Net premiums written (NPW) increased by nearly 13% in 2023, marking the highest premium growth in the mutual segment over the past decade.

“Insurers continue to pursue rate adequacy, with many looking to implement additional rate increases in the second half of 2024, likely continuing into 2025,” added Magro.

At the close of 2023, policyholders’ surplus for U.S. P/C mutuals was just under $400 billion, an increase from 2022, but still below 2021 levels. The change in surplus was largely driven by a recovery in the equity market, which reported unrealized capital gains of over $18 billion from 2022 to 2023.

The report also notes that over the past five years, mutual insurers’ investment portfolios have remained conservative, with bonds representing around 60% of investments annually, while stocks have constituted 19% to 23%.

For those individuals interested in purchasing a copy of the report, a full copy of this report can be accessed here: http://www3.ambest.com/bestweek/purchase.asp?record_code=346870 .

The top 25 US Property/Casualty Mutual Writers in 2024 According to AM Best

The following are the top mutual insurer writers in the nation according to data compiled by the rating agency in the September edition of BestReview. The insurers are ranked according to 2023 net premiums written.

RankCOMPANY1.State Farm Group2.Liberty Mutual Ins. Co.3.Nationwide P&C Group4.American Family Insurance Group5.Auto-Owners Insurance Group6.FM Global Group7.Sentry Insurance Group8.Country Financial PC Group9.Amica Mutual Group10.Westfield Group11.Shelter Insurance Group12.Acuity, A Mutual Insurance Co.13.Federated Mutual Group14.EMC Insurance Group15.Alfa Insurance Group16.Farm Bureau P&C Group17.TN Farmers Insurance Co.18.Texas Farm Bureau Ins. Group19.State Insurance Fund WC Fund20.Utica National Insurance Group21.Grange Insurance Pool22.North Carolina Farm Bureau Insurance Group23.KY Farm Bureau Group24.Encova Mutual Insurance Group25.CUMIS Insurance Society Group

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.