Conning Research Caution Flag for Personal Automobile Insurance

Following a Rough Road in the 1990’s, Mediocre Financial Results to Continue

(Hartford, CT) Personal automobile insurers will experience disappointing financial results over the next five years, continuing a pattern of mediocrity dating back to 1993, according to a new study from Conning Research & Consulting, Inc.

In the study, “Caution Flag for Personal Automobile Insurance,” Conning analyzes the personal automobile line over the past nine years against two benchmarks: premium growth equal to Gross Domestic Product growth and return on surplus of 12%. Not once during 1993-2001 did the industry achieve both benchmarks in the same year.

“Personal automobile insurance shrank as a portion of the U.S. economy and generated a return on surplus of only 7.8% during 1993-2001,” said Michael Weinstein, Director of Research, Conning Research & Consulting. “Given the frequency of outright poor results on a year by year or insurer by insurer basis, Conning sees danger on the track. The nature of the marketplace will prevent those trailing the leaders from moving up.”

The Conning study, analyzing the results of 161 insurers for personal auto during 1993-2001, found that only 15 insurers achieved averages exceeding the benchmarks for both growth and return on surplus. The study explores why those insurers succeeded and the industry did not.

Further, Conning sees little reason to expect broad improvement during 2003-2007. The study considers likely developments in premiums, loss exposures, expenses, investments, realized gains, and premium to surplus leverage.

“We expect no fuel injection to boost the performance of most personal automobile insurers over the next five years,” said Weinstein.

“Caution Flag for Personal Automobile Insurance” may be purchased from Conning Research & Consulting, Inc. by calling (888) 707-1177 or (860) 520-1521. A complete listing of all Conning research products may be found at www.conningresearch.com.

About Conning Research & Consulting

The Conning name has represented excellence in independent insurance industry research for more than 90 years. As a result of its wealth of experience and intimate knowledge of the insurance industry, Conning understands industry challenges and opportunities and can provide in-depth insights and analyses. Conning provides both public and proprietary research as well as consulting services to the financial services industry. Conning has offices in New York and Hartford.

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