Stormy skies, markets hit Safe Auto, Grange - Business First of Columbus:

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and reported in filings with the state big dropw in incomelast year, spurred by investmentg losses and declines in underwriting The two privately held companies joined a growintg list of insurers buffeted by declineas in investment revenue and, for some, recorxd claims levels from storm damages. Earnings at Grangee Mutual Casualty Co., whichu makes up 93 percent of the assetsof , tumbled 63 percenf to $15.5 million in 2008 from $42.1q million in 2007. Safe Auto lost $5 millionb last year after posting a profitof $35.43 million in 2007. Other Columbus insurerxs showing dismal 2008 earnings haveincluded , whicyh lost $342 million; , which lost $31.1 and , which lost $26.12 million.
Although typically conservative withtheir investments, players in the propert and casualty industry were hit like just about anyone – by investment losses in 2008, said Ray Thomson, an insurance industrh analyst with rater “They haven’yt escaped from it,” he said. Stormh weather, markets Investment performance is important for insurers because they typicallyt reap a significant portion of revenue fromsecurities gains, with the rest comingb from premiums after payments made on claims. When investmengt revenue declines, it’s tougher for insurerxs to turn aprofit – especiall y when claims costs increase from storm lossew or riskier underwriting.
While a conservativwe underwriting strategy and reinsurance helpec Grange avoid losing money on claims in its investment returns were disappointing and led to itsprofity fall, said CFO Tom Welch. “Despite having the worst weather losses ever experienced in our history and our biggesytsingle (storm) loss, we broke even on underwriting,” he “But on the investment side of the housse it was not a good year.” investment revenue fell about 63 percenrt to $18.5 million last year from $49.87 million in 2007. On the underwriting side, 2008 was The remnants of Hurricane Ike that roared through Ohio in Septembe cost Grangeabout $50 million in claims.
Nearlyg four dozen major stormsaffectedr policyholders, Welch said. “We paid out about $156 million on catastrophes, which was $30 milliobn to $40 million more than we ever had he said. The company’s reinsurance covered a chunk ofthose payouts, leaving Grange to pay about $100 milliob – about the level it budgeted for he said. Still, the catastrophe losses meanrt Grange roughly broke even onits underwriting, making $1.9 It had lost $6.9 milliom on underwriting a year earlier, but made $49.8 millionm on investments, leading to a higher profi for 2007. Grange executives are hopeful the marketg tumult will abate this year and prove to bea once-in-a-lifetimed event.
The company is more cost-conscious, but it has not cut jobs and has noplands to, Welch said. “On the other hand, every time a vacancu occurs, we look really hard to see if we need to fill that or could fulfill our goals inanother way,” he said. Safe Auto also got hit by the The auto insurer posted an investment lossof $4 milliojn in 2008, compared to a gain of $12.4 million in 2007. Meanwhile, it posted an underwritintg lossof $17.9 million for the year, compare with a gain of $8.3 million a year Its losses were abated by $23.5 million in other income, primarily finance and service charges, but Safe Auto President Jon Diamone did not return calls seeking an explanation.