The art of underwriting: highly focused niche insurers are outperforming many of their larger, more diverse peers in four lines of commercial property/casualty insurance, according to a study by A.M. Best Co.(underwriting profit)

Best's Review, November, 2005 by Green, Meg

When it comes to profitable underwriting, commercial property/casualty insurers that outperformed their peers tend to have a one-track mind.

A.M. Best Co. studied four lines of commercial insurance--workers' compensation, fidelity and surety, medical malpractice and commercial auto--and found those companies that rose to the top in underwriting profitability often did so with a sharp, laser-like focus on a particular area of expertise.

Insurance companies can make money two ways: first, through the actual business of insurance, and secondly, through investments. It's common for insurers to break even or even lose money on their main business, insurance, but still be profitable based on their revenue from investments.

One measure of business...

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