Indiana, U.S. headquartered insurer, Protective Insurance Corporation, has reported an improved loss ratio and combined ratio for the second-quarter of 2020 as actions to enhance its underwriting performance start to have an effect.
Protective has reported a combined ratio of 101.4% for Q2 2020 compared with 107% in the prior year quarter, producing an underwriting loss of more than $1 million, which is an improvement on the $7.4 million loss produced a year earlier.
During the quarter, loss and loss adjustment expenses (LAE) declined for Protective to $68.2 million, resulting in an 8.6 percentage point dip in its loss ratio to 70.1% in Q2 2020. Somewhat offsetting the lower loss ratio was a slightly higher expense ratio of 31.3% in Q2 2020.
Protective states that the improvement in its loss ratio and combined ratio during Q2 reflects actions it has taken to improve its underwriting performance, which includes the non-renewal of unprofitable business and also “significant” rate hikes in the commercial automobile space. In fact, the firm has decided to cease underwriting public transportation business from the fourth-quarter of 2020, in light of continued profitability challenges.
The insurer’s gross premiums written (GPW) fell by 21.5% in the second-quarter of 2020 to $115.4 million, while net earned premiums declined by 15.5% to $97.7 million. For the first six months of the year, Protective has reported GPW of $249.5 million, which is a decrease of 15.7% on the same period in 2019. During this period, net premiums earned fell by 8.1% to $207.4 million.
The reduction in GPW and net premiums earned in both periods reflects the underwriting actions taken by the firm as it looks to improve the performance of its book, as well as the impact of the COVID-19 pandemic.
Overall, the company has announced net income of $11.4 million for the second-quarter of 2020, which is up significantly on the $1.5 million reported in Q2 2019. For the first six months of the year, Protective has reported a net loss of $10.8 million, which is down on the $4.3 million of net income posted in H1 2019.
Net investment income fell in Q2 2020 to $6.4 million from $6.5 million a year earlier, and for the half-year, net investment income increased by 6.9% to $13.6 million.
Jeremy Johnson, the company’s Chief Executive Officer (CEO), commented: “Our quarterly results demonstrate the strength of our franchise, the commitment of our colleagues and our ongoing progress towards sustained underwriting profitability. Excluding discontinued lines of business, premiums written in our core trucking books increased during the quarter and our focus on pricing improvements and risk selection has materially improved our loss ratios. Our customers continue to make essential deliveries, large and small, across the USA, and we are proud to support them.”
