American Modern to pause writing new HO business in at least 11 US states in March

By James Thaler

Jan 28 - Munich Re-owned American Modern will pause the writing of new homeowners business in at least 11 states beginning in March, The Insurer can reveal.

Agents were recently notified that from 1 March, American Modern will not write new business in Arizona, California, Georgia, Idaho, Iowa, Mississippi, Missouri, Nebraska, North Carolina, South Dakota or Virginia.

In Arizona, Idaho, Iowa, Mississippi, Missouri, Nebraska, North Carolina, South Dakota and Virginia, American Modern is halting new business of its Homeowners FLEX program.

American Modern’s FLEX policy largely follows a standard all-risks HO-3 coverage form, insuring homes with a minimum value of $50,000 and up to a maximum of $1mn.

In California the insurer is pausing new business for manufactured homes and basic dwelling coverage, and in Georgia for special dwelling coverage.

American Modern is understood to have written somewhere north of $900mn in combined homeowners' and farmowners' multi-peril premium in 2023 and wrote more than $2.4bn in total gross premiums, according to data from S&P Capital IQ, .

By state, American Modern wrote $277mn of premiums in California in 2023, $106mn in Georgia, $66min Arizona, $14mn in Idaho, $16mn in Iowa, $33mn in Mississippi, $45mn in Missouri, $17mn in Nebraska, $79mn in North Carolina, and $42mn in Virginia.

Although the proportion of those premiums stemming from homeowners' business was unclear, in 2023 around 47 percent of American Modern’s portfolio was made up of personal lines direct written premium.

American Modern’s homeowners' and farmowners' multi-peril jumped to 115.12 percent in 2023 from 100.99 percent in 2022 and 104.54 percent in 2021, and was closer to the 112.93 percent combined ratio the segment produced in 2020.

The segment last produced an underwriting profit in 2019, when it generated a 98.67 percent combined ratio.

The insurer’s loss and loss adjustment expense ratio for homeowners' and farmowners' multi-peril business rose to 59.50 percent in 2023 – up from 54.48 percent in 2022, but an improvement from 62.14 percent in 2021 and 67.48 percent in 2020.

American Modern’s suspension of new homeowners' business across 11 states comes after major admitted carriers have drawn significant attention for their pullbacks in a number of cat-prone states.

In December Liberty Mutual subsidiary SafeCo said it was discontinuing several underperforming auto and renters products in California over the next two years.

In 2023 State Farm said it would stop writing new home and auto policies in the state of California, and went on to non-renew 72,000 homeowners, rental dwelling, and commercial apartment policies in March 2024.

In the same month American National said it would stop writing homeowners' business in California and eight other states.

A spokesperson for Munich Re and American Modern has been contacted for comment.