A majority of the largest US homeowners insurers had year-over-year growth in direct premiums written and improved loss ratios in the second quarter despite an active stretch of severe weather.

Insurers booked direct premiums written (DPW) of $46.16 billion in the quarter, a 13.6% increase from $40.61 billion a year ago, according to an S&P Global Market Intelligence analysis. Direct premiums for the sector have risen 53.2% from $30.13 billion in the second quarter of 2020.

Loss ratios also showed dramatic year-over-year improvement in the quarter, falling 12 percentage points to 79.1% from 91.1% in the second quarter of 2023.

State Farm Mutual Automobile Insurance Co. remained the homeowners market-share leader despite a year-over-year double-digit spike in its loss ratio. The insurer's DPW rose 16.1% year over year to $8.4 billion from $7.24 billion for an 18% market share.

The Allstate Corp. had a 13.7% premium increase to $4.03 billion for a 9% market share as the top five remained the same compared to a year ago. United Services Automobile Association (USAA) was third with a 7% market share on a 16.2% increase in DPW to $3.27 billion.

Liberty Mutual Holding Co. Inc. was fourth with a 6% market share, while Farmers Insurance Group of Cos. was fifth at 5%. Liberty Mutual had a 2.2% year-over-year rise in DPW to $2.91 billion, while Farmers improved by 5.1% to $2.52 billion.

Rate increases and growth in policies in force were the main factors in the Allstate brand's improvement in average premiums. The insurer took rate increases of 11.6% in 25 locations in the first half of 2024, resulting in a total estimated premium impact of 4.5%, according to the company's Form 10-Q.

CEO Tom Wilson said during an earnings call that Allstate has made "three-quarters of the profit that the whole industry has made" because of its business model, adding that "we're good at homeowners."

"A lot of people are bailing on growth in that market because they were either part of the 25% or they were part of the negative amount that led to us having three-quarters," Wilson said. "So we think that is a great growth opportunity."

State Farm, meanwhile, saw a sharp increase in homeowners losses, mostly from severe weather in the quarter, to record its worst underwriting results in a second quarter in 13 years, according to S&P Global Market Intelligence principal research analyst Tim Zawacki.

The Bloomington, Ill.-based insurer's loss ratio deteriorated 11.8 percentage points to 94.8% from 83%, the only insurer in the top 10 of the analysis whose ratio worsened. State Farm had consolidated underwriting losses totaling $4.35 billion compared with $3.92 billion in the second quarter of 2023, according to Zawacki, its largest underwriting loss in a second quarter since 2011 after adjusting for inflation.

Premiums surge

Nine of 10 companies in the analysis saw year-over-year improvement in DPW, six by double-digits. Erie Insurance Exchange, a subsidiary of Erie Indemnity Co., and American Family Insurance Co. had the highest increases at 27.5% and 25.1%, respectively, followed by USAA at 16.2%, State Farm at 16.1%, Allstate at 13.7% and Chubb Ltd. at 12%.

The Travelers Cos. Inc. and Liberty Mutual logged DPW increases of 7.9% and 2.2%, respectively. Nationwide Mutual Insurance Co. saw its DPW fall 5.2%, the lone insurer in the top 10 to report a decrease.

Ratios weather the storm

Loss ratios improved for nine insurers in the top 10 despite several severe weather outbreaks in the quarter, particularly in the Midwest and South. All 10 companies reported ratios of less than 100%.

The National Oceanic and Atmospheric Administration's National Centers for Environmental Information logged 13 events in April, May and June where overall damages and/or costs reached or exceeded $1 billion in inflation-adjusted economic losses. Damages from the events in the quarter totaled $31.9 billion and led to 45 fatalities.

Six companies experienced double-digit, percentage-point improvement compared to the second quarter of 2023, led by Allstate, which saw its ratio plunge 28.1 points to 72.8% from 100.9%. USAA's ratio declined 19.5 points to 93%, while Travelers' ratio was 86.1%, a 17.8-point year-over-year improvement.

Chubb had the lowest ratio at 52.3%, while American Family had the highest at 96.9%.