Zurich Insurance Group AG and Liberty Mutual Holding Co. Inc. reported the highest direct incurred loss ratios for workers' compensation in the first quarter of 2023, a period in which the business line's loss ratios deteriorated year over year.
Zurich logged the worst loss ratio for the first quarter at 69.2%, a sharp increase from 54.1% a year earlier. Liberty Mutual followed closely behind with a first-quarter loss ratio of 63.5%, a much more modest increase from the 62.3% posted in the first quarter of 2022.
US workers' compensation direct premiums earned rose 4.3% year over year in the first quarter, and the industry's overall direct loss ratio deteriorated by 2.3 percentage points. Direct premiums earned grew to $13.50 billion from $12.95 billion a year earlier, according to an S&P Global Market Intelligence analysis.
Small loss ratio improvements for a few big names
While most insurers saw workers' comp loss ratios deteriorate year over year, a handful managed to eke out some better results.
The Travelers Cos. Inc., The Hartford Financial Services Group Inc., AF Group and Old Republic International Corp. all saw year-over-year improvement in their first-quarter loss ratios, with favorable prior-year reserve development helping some of those names.
The Hartford's loss ratio improved 2.2 percentage points year over year to 45.1% in the first quarter. In a recent regulatory filing, The Hartford said it decreased reserves for the 2014 to 2019 accident years, mostly in the small commercial space. The change was driven by claim severity that was lower than previously estimated.
Travelers booked the largest improvement in its first-quarter loss ratio, which declined 7.2 percentage points year over year to 50.1%. Net favorable prior-year reserve development amounted to $19 million in the first quarter, which was driven by a better-than-expected loss experience in the domestic operations workers' compensation line for multiple accident years, according to a regulatory filing.
On the flip side, Chubb Ltd. saw the most significant year-over-year deterioration in its workers' compensation loss ratio among all companies in this analysis. Chubb's first-quarter loss ratio came in at 52.9%, much worse than the 34.7% recorded a year earlier.
Travelers, Hartford stay strong
Travelers kept its position as the largest writer of workers' compensation in the US in the first quarter of 2023, with $950.7 million in direct premiums earned. It was followed closely by The Hartford, which claimed second place, with $910.7 million in direct premiums earned.
The Hartford and Travelers both control about 7% of the overall workers' compensation market each, while AmTrust Financial's 6% of the market makes it the third-largest insurer in the business line.
Amtrust Financial also saw the biggest year-over-year increase in premiums in the first quarter of 2023. The company booked $795.5 million in direct premiums earned, which reflected a jump of 19.6%.
Meanwhile, AF Group saw the largest year-over-year decrease in premiums, reporting a 10.3% drop in direct premiums earned in the period.
Combined ratios improved in 2022
US insurers' combined ratios in the workers' compensation business line improved for full year 2022 compared to the prior year.
The industry had a combined ratio of 84.5% for 2022, an improvement from 88.1% in 2021.
