The average combined ratio of the largest U.S. homeowners insurers was over 100% yet again in 2021, marking the fourth time in five years that the figure has been above the profitability benchmark, according to an S&P Global Market Intelligence analysis.

'Hard market'

Piper Sandler analyst Paul Newsome in a research note described homeowners insurance as a "rock hard market" where underwriting profits can swing by large amounts and surprise investors on both the upside and downside. The analyst noted that Florida homeowners are having difficulty finding insurance policies and large companies such as American International Group Inc. and Chubb Ltd. have effectively left California for expensive homes.

"A real hard market usually involves capacity limitations and that can be found in the home insurance market but few other insurance markets," Newsome said.

Majority of largest homeowners insurers post combined ratios over 100%

More than half of the largest homeowners underwriters logged combined ratios in excess of 100% in 2021.

The largest writer of home insurance in the U.S., State Farm Mutual Automobile Insurance Co., posted a combined ratio of 100.7% for the year. Tokio Marine Holdings Inc. had the worst combined ratio in 2021 of 144.4%.

The Hartford Financial Services Group Inc., which writes the least amount of home insurance among the companies included in this analysis, had the group's lowest combined ratio at 86.7%.

Travelers sees premiums rise

The Travelers Cos. Inc. grew its direct premiums written for the home segment by 14.2% to $5.56 billion in 2021, to go along with a 100% combined ratio. Michael Klein, executive vice president and president of personal insurance, said in an earnings call that Travelers will continue to seek rate increases this year.

"As a reminder, for homeowners, we expect the upcoming second quarter to be the seasonally highest quarter for weather-related loss levels," he said.