US P&C sector hit with underwriting loss – report
US P&C sector hit with underwriting loss – report | Insurance Business America
Property
US P&C sector hit with underwriting loss – report
Yet there is still some good news…
Property
By
Terry Gangcuangco
Analysis by credit rating agency AM Best shows the property & casualty insurance sector in the US is in the red in terms of underwriting results in 2023.
“The US P/C industry recorded a $21.2 billion net underwriting loss in 2023, slightly improving from the $24.9 billion loss recorded in the prior year, as 9.9% growth in net earned premiums was countered by a 4.5% increase in policyholder dividends and a 10% increase in incurred losses and loss adjustment expenses, as well as a 6.4% rise in other underwriting expenses,” AM Best noted in its “First Look: 2023 US Property/Casualty Financial Results” report.
“Losses in the personal lines segment, specifically the homeowners line of business, were primarily responsible for the weak underwriting results.”
According to the AM Best report, which was based on data from companies whose 2023 annual statutory statements were received as of March 8 this year, the industry’s combined ratio improved slightly to 101.6.
“We estimate that catastrophe losses accounted for 8.7 points on the 2023 combined ratio, up from an estimated 7.3 points in the prior year, driven by record severe convective storm losses,” AM Best said. “Excluding $2.0 billion of favorable reserve development during 2023 (down from favorable development of $4.8 billion in the prior year), the industry’s accident year combined ratio was 101.8.
“With earned net investment income virtually unchanged from the prior-year period, the lower underwriting loss boosted pre-tax operating income 4.8% to $50.0 billion. A $51.1 billion change in net realized capital gains at National Indemnity Company resulted in net income for the industry more than doubling to $90.1 billion.
“This, combined with the impact of the change in unrealized gains, contributed capital, other surplus gains, and a significant amount of stockholder dividends at $108.0 billion, has resulted in industry surplus increasing to $1.0 trillion at year-end 2023.”
Net income across US P&C insurance, meanwhile, more than doubled from 2022’s $44.7 billion to $90.1 billion in 2023.
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