American Family Insurance has turned a corner in 2024, reporting an underwriting profit for the first time in three years. The company achieved a combined ratio of 96.6 across all its property and casualty lines, a significant improvement from the previous year’s 110.8 and 111.4 in 2022. This positive shift occurred despite facing high catastrophe losses, with the company paying out $3.3 billion in claims last year, slightly less than the record $3.5 billion in 2023.
In financial terms, American Family’s net underwriting profit reached $603 million in 2024. This is a remarkable recovery from the losses of $1.7 billion in 2023 and $1.5 billion in 2022. The company’s net income after taxes also rebounded, hitting $2.5 billion compared to a loss of nearly $900 million the year before.
Bill Westrate, the chair and CEO of American Family Insurance, credited the company’s focus on customer value and strategic actions for this turnaround. He mentioned that these efforts have strengthened their financial position and set a solid foundation for future growth.
Total revenue for the company rose 17% to $20 billion, driven by rate increases and investment income. Direct written premiums also saw a 13.9% increase, totaling $19.6 billion. However, strategies aimed at boosting profits did affect customer retention and new business, leading to a decrease in the number of policies in force, which fell by 2.8% to 13.6 million.
The company has been actively focusing on its core business segments and implementing plans to improve profitability in response to challenges like natural disasters and inflation. Troy Van Beek, the CFO, expressed confidence in their financial position as they move into 2025.
Members’ equity also saw a healthy increase, rising to $10.6 billion from $8.0 billion in 2023. This growth was partly due to the $1.7 billion sale of The General to Sentry Insurance, along with gains from underwriting and investments.
Investment income was particularly strong, with pre-tax earnings climbing 70% to $1.6 billion. Realized investment gains reached $1.3 billion, a stark contrast to the losses recorded in the previous year.
In addition to financial improvements, American Family Insurance has taken steps to enhance employee satisfaction. They raised their minimum wage to $25 per hour and expanded benefits, including parental and caregiver leave policies, to attract and retain talent.
Overall, American Family Insurance’s 2024 results highlight a successful recovery and a commitment to strengthening its operations and workforce as it heads into the future.