Commercial property insurer sees growth in gross premiums and net income
Commercial property insurer FM Global has announced that 2007 marked its sixth consecutive year of strong financial and operating performance.
The company saw successes in all areas most important to a mutually-owned insurance company including stable capacity and services, profitability, capital growth and client retention.
In 2007, gross premium in force grew by 4.2 percent to US$4.7 billion. Net income grew by 26 percent to US$928 million, the largest in the company’s history. Policyholder surplus grew to an all-time high of US$6.3 billion, resulting in a 24.7% annual compound rate of growth during the past five years.
The company’s combined ratio was 73.4 percent, better than forecast due to the absence of large insured natural disaster losses. Additionally, FM Global’s client retention rate was 92 percent.
Among its 2007 highlights:
· FM Global provided eligible policyholders who renewed their policies in 2007 with a collective US$341-million membership credit as a way of sharing its profitability with clients due to better-than-expected operating performance in recent years. It also earmarked a membership credit of US$380 million to eligible policyholders renewing in 2008.
· More than 90 percent of FM Global’s policies were delivered to clients within 30 days of inception, ensuring contract certainty, compared with a 67-percent success rate in 2006.
· FM Global received regulatory approval to establish a representative office in Beijing, China. This is the first step toward establishing a China-based wholly owned insurance company approximately three years from now.
Shivan S. Subramaniam, FM Global chairman and chief executive officer, said: “This past year, FM Global continued to increase its underwriting capacity, improve policy coverage and offer enhanced competitive terms and conditions.
“Overall, we conclude that the company can be successful, even in a price-driven market, by emphasising value-added products and services and working with our policyholders to achieve significant risk improvement.”
Looking ahead to 2008, Subramaniam noted it is imperative that FM Global continue to focus on helping clients address new business risks presented by globalization as they expand, acquire, outsource or relocate their operations in emerging markets - especially those countries with inadequate property protection codes and standards.
