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Walking the walk on underwriting discipline: numbers show long-term underwriting profits best at smaller-focused carriers.

Article Excerpt
UNDERWRITING DISCIPLINE--it's a phrase that's been repeated hundreds of times in the last three years. But which property-casualty companies really have it? And which have been able to garner profits over the long term--reporting record underwriting result seven before industrywide hard market conditions took hold?

In NU's first "Data Insights" issue of 2005, we present some statistics generated by National Underwriter Insurance Data Services to shed some light on these questions. Using combined ratios for 1998-2003 in an attempt to separate insurers that walk the walk from those that simply talk the talk on underwriting discipline, we reveal few household names on the list of top performers.

Among the nation's largest insurers, only Mayfield Village, Ohio-based Progressive appears among the 20 most profitable entities we reviewed for a six-year period. Replacing other familiar brands are less well-known names like IDS Property Casualty (the name on the insurance regulatory filings of the p-c insurance companies in the American Express family), Transguard Insurance Company of America (one of the smallest insurers we analyzed) and crop insurer Agri General Insurance.

Whether it's a multistate crop insurer focused on "rural America" or one of three single-state workers' compensation carriers, a commercial transportation specialist or a low-value personal auto writer, the top-tier companies almost all define themselves as specialists in some narrow corner of the p-c market.

Among the top 20 on our Profit Leaders list, half write five lines of insurance or less, and six write only a single line of business. Seven of the top 20 write in 10 states or less, with three writing in just...