American Family group reports balanced success for 2021
Customer, growth and financial strength results increase during ongoing pandemic, unprecedented December catastrophes
American Family Insurance group today reported strong, balanced financial results for 2021.
American Family Insurance group today reported strong, balanced results for 2021, a year that saw customers impacted by an ongoing pandemic and life-altering storms and wildfires. The year gave the company ample opportunity to do what it does best: help people rebuild their lives.
In 2021, the group achieved historically high customer satisfaction and loyalty, while increasing policyholder equity (also referred to as members’ equity) to more than $11.1 billion.
It also achieved a net income of $735 million, an increase from $403 million in 2020. Net income includes underwriting/operating results, investment income, realized gains (and losses) and taxes.
“During a year of continued uncertainty and challenges, we lived our values in serving our customers, supporting communities, and caring for the well-being of our employees and agency owners,” said CEO Bill Westrate. “Our people remained agile in response to the pandemic, delivering new products, technology platforms, and improved efficiency while fulfilling our promises to our customers.”
In total, American Family responded to a record $2 billion in catastrophe claims, capped off by devastating windstorms, tornadoes and a rare, fast-moving wildfire in Colorado in December.
The group continued providing pandemic-related premium relief to customers as driving trends drew closer to pre-pandemic levels, allocating another $112 million of relief in 2021, on top of the $502 million it issued in 2020.
American Family also bolstered its already strong support of communities, announcing in February 2021 “Free to Dream,” a $105 million commitment over the next five years to continue its focus on climate resilience, diversity and inclusion and the closing of equity gaps.
Claims drive underwriting loss
The group reported a combined ratio of 103.8 for all property-casualty lines, which means it anticipates paying out nearly $1.04 in claims and expenses for every dollar earned in premium, up slightly from 103.5 in 2020.
The group’s property-casualty lines – auto, homeowners and commercial – reported a 2021 net underwriting loss of $460 million. That compares to a net underwriting loss of $402 million in 2020.
The 2021 underwriting loss is due in large part to the company’s response to customer claims. Catastrophe claims of nearly $2 billion were up $154 million from 2020, and the average cost of non-catastrophe auto and property claims increased, due in large part to higher prices for labor, replacement vehicles, auto parts and building materials.
Notably, catastrophe storm losses incurred in December were almost $340 million, which was over 10 times higher than any previous December for the group.
Payments for life insurance claims also increased, driven in part by deaths from COVID-19. Providing life coverage is another way the company supported families facing tremendous hardship.
Growth, revenue and retention increase
The American Family group ended 2021 with 13.1 million policies in force, an increase from 12.8 million at the end of 2020. Direct premium written for the group reached $13.1 billion, an increase of 10.8% from 2020.
Group revenue increased to $14.2 billion in 2021 from $12.9 billion in 2020. Group assets rose to $36.3 billion, an increase of $2.4 billion from 2020, and the amount of American Family Life Insurance Company insurance coverage in force increased to $105.9 billion from $103.6 billion last year.
Customer retention was very strong in 2021, exceeding 2020 measures across all companies and supporting growth.
“By choosing to stay with our companies, customers are showing they value the service they’re getting from our agency owners and employees,” said Westrate. “Customers have rewarded our commitment to exceptional service and value with their loyalty and record high customer satisfaction in 2021.”
Policyholder equity exceeds $11 billion
The group added $525 million to policyholder equity in 2021, bringing total equity to $11.1 billion.
Policyholder equity is an important measure of financial strength, ensuring the group has the resources to help customers recover from severe weather and other unforeseen events. Policyholder equity has increased by $6.2 billion since 2006.
The increase in equity was driven by factors that include strong investment income, capital gains on the stock portfolio and life company gain from operations. The increase was partially offset by a property-casualty underwriting loss. Capital gains for the enterprise in 2021 were $205 million pre-tax, compared with a gain of $1.1 billion in 2020.
“2021 was very strong year for us by many measures, including our policyholder equity, which surpassed $11 billion for the first time,” said Chief Financial Officer Troy Van Beek. “This financial strength enables us to be there for customers when the unexpected occurs, and also ensures we can provide ongoing, industry-leading service.”
See our 2021 annual report on amfam.com.
About the American Family Insurance group
Based in Madison, Wisconsin, American Family Insurance has been serving customers since 1927. We inspire, protect and restore dreams through our insurance products, exceptional service from our agency owners and employees, community investment and creative partnerships to address societal challenges. We act on our belief in diversity and inclusion by constantly evolving to meet customer needs and preferences. American Family Insurance group is the nation’s 13th-largest property/casualty insurance group, ranking No. 232 on the Fortune 500 list. The group sells American Family-brand products, primarily through exclusive agency owners in 19 states. The American Family Insurance group also includes CONNECT, powered by American Family Insurance, The General, Homesite and Main Street America Insurance. Across these companies the group has more than 13,500 employees nationwide.