Commercial and industrial property insurer FM Global has reported a third consecutive year of strong operating performance, with 2004 marking a period in which the company increased its policyholder surplus significantly; maintained a high client retention rate; returned US$316 million to its eligible mutual policyholders in the form of a membership credit; enhanced its worldwide services; and improved its ability to assess and improve risk.
In-force premium rose by 4.5 percent to US$4.1 billion and policyholder surplus grew to US$3.7 billion-a 21.5 percent increase over 2003. Net income was US$558 million versus US$666 million in 2003 and US$244 million in 2002.
Additionally, the company’s premium retention rate was 95.6 percent, attributable to the company’s continued focus on providing large amounts of stable and competitively priced underwriting capacity and worldwide services, coupled with sharing the benefits of the company’s financial performance with its mutual policyholders.
FM Global also achieved a combined ratio of 75.3 percent, significantly exceeding the company’s expectations. Net losses were approximately US$1.2 billion in 2004 versus US$1.1 billion in 2003, generating a loss ratio of 50.4 percent versus 44.1 percent, respectively.
FM Global’s expense ratio in 2004 was 24.9 percent versus 22.3 percent in 2003. FM Global’s loss impact from four back-to-back Florida (USA) hurricanes in August and September 2004 was less than US$100 million, while insurance industry estimates placed the hurricane season’s impact as one of the costliest of the decade. This accomplishment was due, in part, to clients preventing property losses by maximizing FM Global’s risk assessment and improvement services and techniques.
“FM Global’s corporate performance during the past several years has helped make the company a property insurance market leader and, more importantly, the insurer of choice,” said Shivan Subramaniam, FM Global chairman and chief executive officer. “Such results wouldn’t be possible without clients who work to truly understand their property hazards, are committed to reducing their exposure to risk and believe in FM Global’s philosophy that the majority of loss is preventable.”
Subramaniam noted that, in 2005, FM Global will continue working to expand its underwriting capacity, enhance its property loss prevention engineering services and relationship skills, as well as drive its loss and expense costs down.
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