Record year for FM global

by David Masters

Story link: Record year for FM global

FM Global, a commercial property insurer, has reported record results for 2007. The company has seen consistently strong performances over the past five years, and 2007 was the FM Global’s sixth consecutive year with good financial and operating results.

The company saw stable capacity and services, good profitability, capital growth and client retention, all of which are key markers of a strong performance in a mutually owned insurance company.

Gross premium in force grew by 4.2 percent for the year to US$4.7 billion. Net income was up 26% to US$928 million, a new record for FM Global. Policyholder surplus also reached record levels at US$6.3 billion, giving an annual compound rate of growth of 24.7% over the past five years.

Combined ratio for the year was 73.4%, which was better than predicted. Client retention rate was 92%.

Eligible policyholders who renewed their FM Global policies in 2007 received a share of the company’s profits. A total of US$341 million was given out by the company in membership credit. This is set to increase to $380 million in 2008.

Over 90% of the company’s policies were delivered to clients within 30 days of inception, up from 67% in 2006. This ensures contract certainty.

CEO and chairman of FM Global, Shivan S. Subramaniam, said of the results: “This past year, FM Global continued to increase its underwriting capacity, improve policy coverage and offer enhanced competitive terms and conditions.

“Overall, we conclude that the company can be successful, even in a price-driven market, by emphasising value-added products and services and working with our policyholders to achieve significant risk improvement.”

Subramaniam added that in 2008 the company will be looking to help clients address the risks posed by globalisation as they outsource or relocate to emerging markets. This is especially important in countries with inadequate property protection codes and standards.