US Property and Casualty Insurers' Second-Half Profits Likely To Slow

Yellow diamond-shaped traffic warning sign that says SLOW and clear blue sky and partial sun and rays in background

September 17, 2021 |

Yellow diamond-shaped traffic warning sign that says SLOW and clear blue sky and partial sun and rays in background

While US property and casualty (P&C) insurers' statutory earnings improved materially during the first half of 2021, that profit expansion is expected to slow during the year's second half, according to Fitch Ratings.

During the first half of this year, insurers benefited from improved underwriting performance tied to higher commercial lines pricing and diminishing effects of pandemic-related losses, in addition to significant investment gains, Fitch said. The US P&C industry's profits in the second half of 2021 will be limited by losses from recent natural catastrophes, including Hurricane Ida, and deteriorating personal auto results, the rating agency said.

Most commercial market segments benefited from sizable rate increases over the past 2 years, Fitch said. While the pace of those rate increases is slowing, growth of earned premiums in the near term will produce further improvements in commercial lines loss ratios through 2022, the rating agency said, while favorable prior underwriting period loss reserve development will also continue to boost overall results.

During the first half of this year, US P&C insurers' net earnings increased 56 percent from the same period in 2020 to $38 billion, according to Fitch. Net written premiums increased 7 percent year over year to $349.3 billion, while the underwriting combined ratio improved slightly to 97.1 percent from 97.8 percent a year earlier.

Fitch indicated that the US P&C industry's full-year combined ratio should approximate the midyear level.

September 17, 2021