Nationwide's CFO says he would anticipate some upward rate movement from the insurance industry in the wake of Superstorm Sandy.
“I think [companies] will step back and say, 'This is now two years in a row [that the Northeast has been hit by a storm],'” Mark Thresher, the Columbus, Ohio-based insurer's CFO, tells PC360. “They are going to think about their concentrations in this region.”
Nationwide will join the industry in reassessing its exposure, he says, before it decides whether Sandy provides an opportunity for growth in the Northeast or if the storm signals a need for rate increases or a pull-back.
The company has received about 40,000 Sandy-related claims, but it is unclear how many of those will result in payment since it is expected a lot of damages are the result of storm surge—an uncovered peril.
“This makes it difficult to predict amounts of losses,” Thresher says.
Nationwide's commercial-business insurance subsidiaries are expecting Business Interruption claims to “be a big factor,” Thresher adds. Nationwide can also be paying for claims due to commercial property and auto damages.
During the first nine months of 2012, Nationwide hasn't seen much rate increase in personal lines. Instead, says Thresher, rates are increasing in lines of business that are growing the most: Main Street commercial insurance, Excess & Surplus and Agribusiness.
The insurer found opportunity as a result of the drought that gripped the Midwest this year. Though it does not insure crops, Nationwide was in position to take advantage of agricultural shoppers as some insurers raised rates or pulled back from farming risk, Thresher says.
“We've also trained more of our producers how to sell [Agribusiness] products,” Thresher adds.
Q3, NINE-MONTH RESULTS
Nationwide returned to the black with a net profit of $378 million during the third quarter, compared to a loss of $881 million a year ago during the same period.
The insurer says it booked net operating income of $723 million after nine months compared to $375 million during the same time a year ago.
Results were helped by low Catastrophe losses and business growth—organically and by acquisition. P&C results include Harleysville's results since May 1, when Nationwide's acquisition of Harleysville closed.
Year-over-year direct premiums written grew 9 percent to $12.2 billion after nine months. Thresher says exposure growth played a role—a sign of some improvement in the economy.
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