[February 21, 2014]

Fitch Report: Homeowners' Insurance Underwriting Trends Greatly Improve

In 2013, the homeowners' insurance sector will generate its first statutory underwriting profit since 2007, reflecting a sharp decline in natural catastrophe losses, benefits from increasing premium rates and other underwriting actions, according to a new Fitch Ratings' report.

In the new special report, Fitch examined GAAP homeowners results from 2011-2013 for four large, publicly-traded homeowners' insurers, serving as a leading indicator of industry wide results for 2013 that are not yet available. The report group includes the following companies: The Allstate Corp. (Allstate), Chubb Group of Insurance Companies (Chubb), The Hartford Financial Services Group, Inc. (Hartford), and The Travelers Companies, Inc. (Travelers).

This group of companies reported an aggregate homeowners' combined ratio of 79.6% for full year 2013, substantially improved from 92.7% in 2012. The favorable results are largely due to a sharp decline in natural catastrophe losses, which represented 12.2% of earned premiums in 2013 versus 22.8% in 2012.

The group aggregate combined ratio, excluding catastrophe losses, was 67.4% in 2013, nearly 10 points better than the 2011 result, reflecting rising premium rates and stricter underwriting standards. Fitch expects homeowners' insurance prices to flatten, but still trend positively in 2014, promoting further ex-cat underwriting improvement.

The report 'Homeowners' Insurance Underwriting Trends - enign Catastrophe Losses and Higher Prices Boost Results' is available on Fitch's website at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Homeowners Insurance Underwriting Trends (Benign Catastrophe Losses and Higher Prices Boost Results)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=736595

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