Message from the CEO: Q3 2022 Financial Update
As we close the third quarter, I am reminded of the expression, “May you live in interesting times.” There is apparently a fair amount of debate as to whether the expression has its origin as a Chinese proverb meant to serve as a curse. Nonetheless, the entire reinsurance industry finds itself in very interesting times. Beyond the challenges associated with the economy in general, the (re) insurance news seems to be reporting on a consistent basis about a new or different reinsurer that is exiting certain segments of the reinsurance business for a variety of reasons (including pressures associated with historic and recent claims activity). On the other hand, with a changing reinsurance marketplace, the reinsurers that remain in the space see the opportunities in these “interesting” times to build/enhance relationships that will support them for years to come. This paradox in the industry serves as the backdrop for the close of the third quarter.
AmericanAgTM did not have a good third quarter from a financial performance perspective. Catastrophe losses and an underperforming stock market contributed to the results in the quarter. From an underwriting performance, the company lost $18,921,889 in the third quarter. While weather caused a fair share of losses throughout the country in the third quarter (and the world), Hurricane Ian drove the poor results for AmericanAgTM. As you might recall, Ian made landfall on the western coast of Florida as a very strong Category 4 storm before also causing damage in South Carolina and North Carolina. There is a wide disparity in the insurance industry loss estimates for Ian, ranging from $40 billion to $70 billion (or more).
Given uncertainty in the reinsurance marketplace, it is very important the company remain on plan with respect to expected premium. And that is exactly where we stand at the end of the third quarter. By way of example, our financial plan called for the company to have $354,600,000 in Premium Earned through the first nine months of 2022. At the end of the third quarter, the company was at $357,449,807 – a very modest $2,849,807 over plan.
AmericanAgTM ends the third quarter with a Loss Ratio of 90% (YTD) and a Combined Ratio of 106.4% (YTD). Ending surplus through the quarter is $647,496,173 (a loss of $15,045,281 in surplus for the quarter and loss of $24,092,372 in surplus for 2022).
As AmericanAgTM approaches its 75th anniversary in 2023, we understand that volatility on a quarterly basis is part of our business. We also know that the core foundation of our business is the relationships that we have with our clients and reinsurance business partners. Storms and other losses will come and go, but the relationships that the company has with its partners will not. At AmericanAgTM, we are playing the long game, and we look forward to the opportunities in these “interesting” times to build and strengthen those relationships.
AmericanAgTM has a solid financial foundation and more than 70 years of experience. With $1.48 billion in gross premium written in 2021, we rank among the world’s 50 largest reinsurance groups, as rated by A.M. Best.