Personal auto

The Manheim Used Vehicle Value Index dropped 9.2% year-on-year, to 204.0.

A Branch spokesperson cited persistent inflation as a “significant challenge for home and auto insurance companies” and the reason for the staff reductions.

December’s increase was an acceleration from 19.2% in November and October, with the CPI all-items index up 3.4% vs a 3.1% YoY rise for November.

“The spring bounce was much more pronounced than expected in 2023, and prices slid just as rapidly after that bounce, finishing more calmly in December as expected,” said Cox Automotive’s Jeremy Robb.

Cooling CPI metrics and improving loss ratios indicate a positive shift for the personal auto industry, but results are not yet back to where they need to be.

It is understood that the cuts are based on a review of five-year loss ratios, and that agents above 70% will be impacted.

Medical care prices – an indicator of medical inflation, a key input to long-tail loss costs – were up 0.2% YoY, after an 0.8% drop for October and a 1.4% drop for September.

The ratings agency also downgraded carrier’s Long-Term Issuer Credit Ratings (Long-Term ICR).

Personal auto carriers risk falling behind in the battle between loss costs and approved rate declines, while homeowners carriers’ double-digit filings might not be enough to keep up.

While November’s decline was only slightly less than October’s, the move lower was on Manheim's radar, given the typical seasonal downward trend that paused in August and September.

Reciprocals have been cropping up more recently, with a shift toward cat-exposed lines, giving investors a quick way to tap into the hard market with an expectation of a rich multiple at exit.

The ratings agency cites ongoing deterioration in results for personal auto and homeowners’ lines, along with rising loss costs, driven by inflationary pressures.