Positive news on personal auto lines led the agenda during second-quarter earnings calls for property and casualty insurers, who talked more about growth as profitability issues faded.
Many insurers reported year-over-year increases in earnings and declines in combined ratios, as sell-side analysts predicted.
The Progressive Corp. was one example of this positivity as revenues for its personal lines, 93% of which are written for personal auto, increased 21% to $13.8 billion from $11.4 billion a year ago. Meanwhile net premiums written for Progressive's personal lines rose 26% year over year to $14.56 billion from $11.6 billion as its personal lines combined ratio fell to 88.6%.
Personal auto was also a bright spot for The Allstate Corp., as rate increases and moderating loss trends helped written premiums increase 12.3% year over year to $9.3 billion from $8.3 billion. The segment's underlying combined ratio improved 8.7 percentage points to 93.5% from 102.2% a year ago.
Profitability taking hold
Insurers have taken advantage of continuing rate increases and easing loss-cost trends to improve their bottom lines in the personal auto space, reporting rises in written premiums and improved ratios.
Allstate's auto brand implemented rate hikes of 5.7% in 21 locations in the second quarter, while its National General Insurance Co. brand had increases that averaged 11.2% over 27 locations. That sparked the increases in earned and written premiums.
"We feel real good about the vast majority of the country, geographically, where we're comfortable investing, and you see the momentum that's been building over the course of the year," President of Property-Liability Mario Rizzo said during an earnings call.
An 8% drop in frequency in Progressive's personal lines was aided by a change in its business mix and non-rate actions taken last year, said CEO Tricia Griffith.
The Travelers Cos. Inc. also experienced growth in the personal auto sector, with net written premiums jumping 10% to $2.0 billion from $1.82 billion, while its underlying combined ratio for the personal lines segment overall improved to 86.3% from 94.1% a year ago.
The Hartford Financial Services Group Inc.'s return to profitability in personal auto is a work in progress, but CEO Christopher Swift said during the company's earnings call that its second-quarter financial performance "demonstrates continued progress toward target margin improvement."
Written premiums rose 14% year over year to $617 million from $543 million, while renewal price increases in the quarter for the segment came in at 23.5%.
Ad spend rebounding
Progressive was one of the best examples of companies that have ramped up their advertising efforts as their bottom lines brighten, increasing its marketing budget by 150% year over year and boosting its year-to-date advertising costs to $1.6 billion.
Griffith said the insurer's advertising spend reflects "our confidence in our rates."
"Our intentions are to continue on this path and really leverage where we're at from a competitive perspective," she said.
Allstate's Rizzo said the company is investing in growth to "drive production" in states where the company has gained rate adequacy, which includes advertising. He said Allstate has increased its advertising investment by "approximately $300 million to support growth efforts in states with attractive returns."