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.