PURE Annual Report 2018
PURE Insurance has released its annual report to members for the 2018 fiscal year. Highlights include:
- PURE achieved an A rating from AM Best, up from A-
- Gross Written Premium increased from $781M to $962M
- Membership increase from 70,475 to 81,372
- PURE Group assets increased from $886M to $1,002M
- Adjusted Combined Ratio decreased from 88% to 80%
- Adjusted Combined Ration, excluding catastrophic events, decreased from 77% to 66%
Thoughts on PURE’s Annual Report 2018
PURE continues to achieve staggering growth numbers, driven by their underwriting appetite, aggressive pricing, and technology. We foresee this continuing well into the next 3-5 years before there is a plateau. Of course, at that time they may innovate something new which changes the curve.
While not the largest insurer, PURE continues to stick to what it does best–developing aggressively priced solutions to meet the needs of its members. They have yet to leap out of their comfort zone to get into high-risk areas like commercial insurance, aviation risk, or financial products. This leads to their stability and strong loss ratios.
LOSS RATIO
The best statistics to rely on when determining the trajectory of an insurer is its losses. PURE has been able to avoid being bombarded by the recent run of hurricane, flooding, hail, and wildfire losses which have affected its competitors. As long as their underwriting discipline stays strong (and with a bit of luck) they will remain well capitalized.
They continue to have the lowest combined ratio in their space which we love to see.
PREMIUM TO SURPLUS RATIO
Another telling statistic about insurers is their premium-to-surplus ratio. This essentially measures how financially strong an insurer is. Higher ratios mean that an insurer is relying on policyholder surplus to pay its claims. PURE reduced their number to 0.59, which is 0.86 lower than the industry average.
QUOTE TO BIND RATIO
The one statistic that could improve is their quote-to-bind ratio, which decreased from 29.7% to 27.6%. This is expected when seeing large increases in quote volume. If it dips under 25% in 2020 it may be an indicator of a pricing mismatch. Remember, there are only 4 competitors in this space (Chubb, AIG, PURE, and Cincinnati).
Overall Thoughts On PURE
PURE will continue to be a powerhouse in the space for years. Currently, we see PURE and Chubb locked in a battle for most client opportunities with AIG throwing in at the largest account sizes ($100K+ annual spend and global risks).
PURE does need to extend its global capabilities and provide a stronger solution for dude-ranch style exposures. However, they cannot do this at the expense of their underwriting discipline and loss ratio.
About the author
Bob
Strategist | Advisor | Thought Leader
Bob Raymond manages risk for many of the country’s preeminent families and family offices. He is an outside director, educator, and the founder of privateRISK.