Earlier this week, American Family Insurance report a 2022 net underwriting loss of $1.5 billion in its property/casualty lines, up from an underwriting loss of $460 million in 2021.

The company cited the impacts of inflation and catastrophes on loss costs to explain the jump.

The group reported a 2022 combined ratio of 111.4 for all P/C lines—auto, homeowners and commercial—up from 103.8 in 2021.

In total, American Family responded to $2.8 billion in catastrophe claims, including spring storms in the Midwest, Hurricane Ian in Florida and other states in September and winter storm Elliot across numerous states in December.

That catastrophe claims figure was $1 billion higher than the $1.8 billion total for 2021.

In just the months of May and June last year, catastrophe storm losses exceeded $1 billion—a total larger than any previous second quarter for the group whose history dates back to 1927.

While claim loss costs drove the group’s combined ratio up, American Family also reported that its expense ratio dropped 2 points from 2021. “A strong focus on expenses, including streamlining processes and aligning capabilities across operating companies, contributed to this expense ratio improvement, which helps the company provide greater value to customers,” the company said in a media statement.

Like the rest of the industry, American Family Insurance Group was also impacted by declines in stock and bond markets last year, which the group cited as a key driver of a more than $3 billion drop in policyholder equity to $8.2 billion at year-end 2022, compared to $11.4 billion at the end of 2021.

In spite of these numbers, group executives, Chief Executive Officer Bill Westrate and Chief Financial Officer Troy Van Beek pointed to top-line growth as well as strong policy retention and high customer satisfaction scores as measures of the strength.

The group ended the year with 13.5 million policies in force, up 3.0 percent from 13.1 million policies at the end of 2021.

Direct premium written for the group reached $14.6 billion, up 11.7 percent from 2021. New business production for the group grew by 3.4% in 2022.

Group revenue, which included P/C earned premium, life earned premium and investment income, held steady at $14.4 billion from 2021, with increases in premium earned and investment income offset by valuation changes in the group’s equity investment portfolio.

Source: American Family Insurance Group