Nationwide Mutual Insurance Co. is moving to exit its high-net-worth personal lines business, a symptom of a perfect storm of factors that have come together to make the personal lines market tough sledding for national and regional carriers.
Over the past couple of years, the personal lines market has been buffeted by the effects of loss-cost inflation, worries about the affordability and availability of reinsurance coverage, limited investor appetite for volatility, and more. Many of those pressures are amplified in the high-net-worth sector, according to a report from S&P Global Market Intelligence.
Nationwide, which recently named a new leader for its personal lines business, first announced its intent to exit its high-net-worth business in an October news release.
“The move by Nationwide to non-renew its entire US book of private client homeowners, private auto, personal collections and excess liability business is particularly notable given the enthusiasm with which a number of carriers pursued the high-net-worth market during the mid-2010s,” S&P Market Intelligence said in its analysis.
It’s also notable because the clouds seem to be lifting for personal lines business, and fourth-quarter 2023 earnings reports suggest that the high-net-worth segment is already recovering, S&P reported.
Nationwide’s Crestbrook Insurance Co., the underwriter for its private client business, cited changing market conditions as the primary reason for the insurance giant’s withdrawal from the segment. However, Crestbrook said in notices to withdraw the product lines that the high-net-worth segment was “competitive and healthy.”
Crestbrook referenced other players in the market, such as Chubb and PURE, as offering similar products to the HNW market.
Nationwide’s decision to exit the segment is part of a broader effort to streamline its operations. The company announced the streamlining effort in June 2023, citing “headwinds brought on by the economic environment, catastrophic weather events and the impacts of inflation [that] continue to impact the entire industry.”
While underwriting profitability has often eluded Crestbrook, other firms serving the HNW market seem to be flourishing in the space.
Companies like Chubb, Berkley and PURE saw double-digit growth in the combination of their home and private auto businesses during the first three quarters of 2023, S&P reported.
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