The P&C insurance industry consists of companies whose primary business is to provide insurance coverage for property or other physical assets, and to provide casualty or legal liability coverage. Below is current consensus forecast data on financials such as net premium revenue and underwriting income; key ratios, such as catastrophe loss ratio and expense ratio; and profitability, including underwriting margin and operating margin. These key P&C insurance metrics aid market participants in identifying P&C insurance industry trends and future performance of P&C insurance companies, such as People’s Insurance Company of China, Zurich Insurance Group and Berkshire Hathaway. View all Property and Casualty Insurance Resources >
What are the most important property and casualty insurance KPIs?
Key performance indicators (KPIs) are the most important business metrics for a particular industry and are where investors should look to find an investment edge. When understanding market expectations for the P&C insurance industry, whether at a company or industry level, here are some of the P&C insurance KPIs to consider:
- Net Premium Earned
- Net Investment Income
- Underwriting Margin
- Retention Ratio
- Loss Ratio
- Book Value per Share
What questions do these key P&C insurance metrics answer?
With Visible Alpha’s P&C insurance industry forecast data, you can discover:
- Which are the leading P&C insurance companies by premium revenue?
- Which P&C insurance companies most efficiently handle their claims and expenses?
- Which P&C insurance companies have been adversely impacted by the most catastrophic losses?
- Which P&C insurance company is expected to generate most of its profits from core business operations in the next two years?
How can this data be used?
By opening up forecast data on key P&C insurance KPIs, Visible Alpha is enabling institutional investors, retail investors, business reporters, students and more to quantify and compare market expectations for companies across the industry.
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This guide highlights the key performance indicators for the property and casualty insurance industry and where investors should look to find an investment edge, including:
- P&C Insurance Industry Business Model & Diagram
- Key P&C Insurance Metrics PLUS Visible Alpha’s Standardized Industry Metrics
- Available Comp Tables
- Industry KPI Terms & Definitions
Gross Written Premium (GWP)
Gross written premium is the total premium collected by an insurance company before adjusting reinsurance and ceding commissions. GWP also includes a gross policy premium, which is collected as of the issue date of the policy, regardless of the payment plan.
Net Written Premium (NWP)
Net written premium is the premium collected by an insurance company after adjusting reinsurance ceded.
Net Earned Premium (NEP)
Net earned premium is the premium earned on the portion of an insurance contract that has expired. Although insurance premiums are often paid in advance, insurance companies earn the premium at an even rate throughout the policy’s term. The unearned portion of a premium that has been paid for forms a part of the unearned premium reserve.
Net Investment Income
Net investment income is the income generated by an insurance company from investments, excluding investment-related expenses.
Policy-related Costs also known as Losses Incurred or Net Claims Incurred
Policy-related costs are the total amount of claims paid by an insurance company which includes paid claims, or expenses associated with establishing a loss reserve to pay a claim in the future and loss adjustment expenses. It does not ordinarily include incurred but not reported (IBNR) losses.
Underwriting income/(loss) is the profit/(loss) generated by an insurance company by providing insurance or reinsurance coverage, excluding the profit or loss generated from investments.
Underwriting margin is the margin or profit generated from underwriting activities.
Pre-tax margin is the margin or profit generated from pre-tax income.
Catastrophe Losses (CAT Loss)
Catastrophe losses are losses that arise from infrequent events causing severe losses, injury, and/or property damage to a large population, as in the case of natural disasters.
Reserve Re-estimates or Reserve Redevelopment
Reserve re-estimate is the increase/decrease in incurred claims and claims adjustment expenses as a result of re-estimation of claims and claims adjustment expense reserves at successive dates for a given set of policies.
Retention Ratio or Reinsurance Retention Ratio
Retention ratio measures the percentage of risk being carried by an insurance company as opposed to what has been passed to a reinsurer.
Loss ratio measures claims paid as a percentage of earned premiums. This ratio indicates the operating efficiency of a company.
Catastrophe Loss Ratio (or CAT Ratio)
Catastrophe loss ratio is the ratio of catastrophe losses to earned premiums.
Reserve Re-estimate Ratio
Reserve re-estimate ratio measures the change in reserves as a percentage of net earned premium. Change in reserves during the year is added to net claims incurred in the income statement. Thus, any change in reserves also impacts operating earnings.
Expense ratio measures the operational efficiency of a company and its ability to manage operating activities. A higher expense ratio will reduce the operating income of a company. Expenses include acquisition cost, servicing cost and other general and administrative expenses.
Combined ratio is the sum of the loss ratio to the expense ratio. A combined ratio of less than 100% generally indicates profitable underwriting by a company.
Loss Ratio excluding CAT Ratio and Reserve Re-estimate Ratio
Loss ratio excluding CAT and reserve re-estimate ratio measures the underwriting efficiency of a company after excluding catastrophe loss ratio and reserve re-estimate ratio. A higher ratio indicates higher claims excluding catastrophe losses and changes in reserves. This can be an indicator of poor claims management.
Combined Ratio excluding CAT Ratio and Reserve Re-estimate Ratio
Combined ratio excluding CAT and reserve re-estimate ratio measures the overall underwriting profitability of a company after excluding catastrophe ratio and reserve re-estimate ratio. A higher ratio implies larger claims or increased operating expenses and could be an indicator of poor claims and expense management.
The premium-to-surplus ratio, also known as underwriting leverage, shows how effectively a company is using its capital resources to generate business.
Annualized Investment Yield
Annualized investment yield measures the profitability of invested assets of a P&C insurance company.
Return on Equity
Return on equity measures the return per dollar on equity investments.
Book Value per Share
Book value per share is used to measure the net value of a company’s assets as per the books of accounts that are available to the shareholders in case of liquidation of the company.
In addition to estimates of the consolidated business, analysts also produce forecasts for individual business and product lines. Some of the more commonly available metrics in our database include:
- Premium written, Net – Automobile, Personal
- Premium earned, Net – Automobile, Personal
- Policy related costs – Automobile, Personal
- Underwriting income/(loss) – Automobile, Personal
- CAT ratio – Automobile, Personal
- Reserve re-estimate ratio – Automobile, Personal
- Loss ratio excl. CAT and reserve re-estimate ratio – Automobile, Personal
- Loss ratio – Automobile, Personal
- Expense ratio – Automobile, Personal
- Combined ratio – Automobile, Personal
- Retention ratio – Automobile, Personal
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