Reduced Underwriting Income for Property-Casualty Industry

Blue graph on dark background with bright blue arrow plunging downward on trendline

September 03, 2019

Blue graph on dark background with bright blue arrow plunging downward on trendline

According to A.M. Best, the US property-casualty industry's net underwriting income declined by 9.6 percent to $4.8 billion in the first half of 2019, compared with $5.3 billion in the same prior-year period. This is based on data derived from companies' 6-month 2019 interim statutory statements that were received as of August 20, 2019, representing an estimated 97 percent of the total property-casualty industry's net premiums written. 

The rating agency said net earned premiums grew by 3.8 percent in the first half of 2019, and underwriting expenses and policyholder dividends were stable; however, this was offset by a 5.6 percent increase in losses and loss adjustment expenses incurred. As a result, the combined ratio for the property-casualty industry weakened by 1 percentage point from the prior-year period to 97.4.  

A.M. Best estimates catastrophe losses accounted for 4.5 percentage points on the 6-month 2019 combined ratio, up from an estimated 4.2 percentage points in the prior-year period. 

A $432 million increase in net investment income during first-half 2019 offset most of the underwriting decline, resulting in pretax operating income remaining unchanged at $33.1 billion. Due to a $1.2 billion reduction in realized capital gains, industry net income declined 2.4 percent from the prior-year period to $32.7 billion.

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September 03, 2019