Increased losses and expenses in the US property and casualty (P&C) industry during the first nine months of 2021 led to a $6.1 billion underwriting loss for the period, according to a new AM Best report.
According to the report, the P&C industry recorded 8.2% growth in net earned premiums and saw a 53.4% decline in policyholder dividends, compared with the nine-month period of 2020.
However, this was offset by a 12.1% increase in incurred losses and loss adjustment expenses (LAE) and a 5.9% increase in underwriting expenses, the rating agency noted.
Despite a 7.8% increase in net investment income and an additional $1.4 billion in other income, the net underwriting loss reduced pre-tax operating income by 5.6% for the nine-month period.
Analysts further observed that a $9.7 billion increase in realized capital gains contributed to industry net income increasing by 21.0% to $42.4 billion from the same prior-year period.
During the first nine months of the year, the combined ratio for the industry weakened from the prior-year period to 99.5%.
AM Best estimates that catastrophe losses accounted for 8.2 percentage points on the nine-month 2021 combined ratio, down from an estimated 8.4 points in the first three quarters of 2020.
This analysis was based on data derived from companies’ nine-month 2021 interim statutory statements as of November 17th, which AM Best estimates to be representative 97% of the total US P&C industry’s net premiums written.
