American Family Insurance group continued to support customers and grow during challenging year for the industry
Customer satisfaction and loyalty increased as group helped people recover after severe weather
American Family Insurance group today reported its financial results for 2022.
American Family Insurance group today reported its financial results for 2022, a year focused on continued support for customers during economic challenges for the industry. Customers showed their appreciation with historically high satisfaction scores and strong policy retention.
In total, American Family responded to $2.8 billion in catastrophe claims, driven by spring storms in the Midwest, Hurricane Ian in Florida and other states in September and capped off by winter storm Elliott, a multi-day weather system that affected customers across numerous states in December.
“Customers across the country experienced a high number of claims, especially related to severe weather,” said CEO and chair elect Bill Westrate. “Our employees and agency owners delivered on our promise, responding with speed and care to fulfill our commitment to customers.”
Claims drive underwriting loss
In 2022, the American Family Insurance group, and the entire industry, saw significant increases to claim costs due to inflationary pressures such as high prices for labor, vehicles, auto parts and building materials. In addition to a record high of $2.8 billion in catastrophe claims – up from $1.8 billion in 2021 – there were also substantial increases in non-catastrophe claim loss costs from 2021.
These inflationary pressures led to the group reporting a combined ratio of 111.4% for all property-casualty lines – auto, homeowners and commercial – which means it anticipates paying out $1.11 in claims and expenses for every dollar earned in premium, up from 103.8% in 2021.
The group had a 2022 net underwriting loss of $1.5 billion in its property-casualty lines. That compares to a net underwriting loss of $460 million in 2021.
Catastrophe storm losses incurred in May and June topped $1 billion, which was larger than any previous second quarter for the group. These losses largely impacted American Family brand customers in Minnesota and Wisconsin.
While claim loss costs drove up the group’s combined ratio, the expense ratio was down almost 2 percentage points from 2021. A strong focus on expenses, including streamlining processes and aligning capabilities across operating companies, contributed to this expense ratio improvement, which helps the company provide greater value to customers.
Payments for life insurance claims were down approximately 5% from 2021, in part a reflection of fewer COVID related death claims in 2022. Life insurance policies in force continue to grow and is another way the company helps customers protect their dreams.
Strong policy retention and growth
Policy retention and growth were strong across the American Family Insurance group in 2022, with 13.5 million policies in force at year-end, up 3.0% from 13.1 million policies at the end of 2021. Direct premium written for the group reached $14.6 billion, an increase of 11.7% from 2021. New business production for the group grew by 3.4% in 2022.
Group revenue held steady at $14.4 billion from 2021, with increases in premium earned and investment income offset by valuation changes in the group’s equity investment portfolio. Group assets were at $36.1 billion, a decline from $36.9 billion 2021.
Customer satisfaction scores were strong across the American Family Insurance group and at or near all-time program highs in 2022. This satisfaction was also reflected in strong customer retention.
“By choosing to stay with our organization, customers show they value the products and service they’re receiving,” said Westrate. “We took care of customers across our group of companies when they had a claim or needed guidance and these results are a reflection of our customer focus and commitment to providing strong value.”
Policyholder equity declines
Policyholder equity declined to $8.2 billion at the end of 2022, down from $11.4 billion at the end of 2021. This decrease is due primarily to broad declines in the stock and bond markets. These market fluctuations had similar impacts across the entire insurance industry.
“Although 2022 was a challenging year for the insurance industry, it was also a strong year for us by many measures, including customer satisfaction, policy retention and growth,” said Chief Financial Officer Troy Van Beek.
Despite the drop in equity, the group remains able to take care of customers and invest in innovations that support industry-leading customer service and value.
“We are financially strong and will continue to invest in our strategy, fulfill our promises and deliver great value to our customers when they need us the most,” Van Beek said.
The company’s commitment to communities continued at a time when the inflationary pressures and economic factors affecting the industry also had impacts for individuals, families and small businesses.
During the second of its five-year, $105 million “Free to Dream” commitment and through the American Family Insurance Dreams Foundation, the American Family Insurance Championship and the company’s Institute for Corporate and Social Impact, American Family invested in and partnered with organizations and businesses across the country to help improve lives, close equity gaps, and champion dreams.
See our annual report on amfam.com.
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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 12th-largest property/casualty insurance group, ranking No. 251 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 nearly 13,000 employees nationwide.