North American property and casualty (P&C) re/insurers generated improved operating returns and underwriting profits in 2018, according to Fitch Ratings.
Analysis of 48 P&C re/insurers’ results showed that performance across the sector improved despite a second consecutive year of higher than average catastrophe losses.
Insured cat losses represented 5.0% of aggregate net earned premiums (NEP) in 2018, analysts said, which remains above historical norms, but was nearly half of the 9.3-point catastrophe loss impact in 2017.
“The P/C market experienced a series of multi-billion dollar catastrophe loss events in 2018, which led to sizable aggregation of losses, but no individual event was large enough to have a significant impact on capital in the market,” explained Chris Grimes, Director of Insurance at Fitch.
Strong operating results were generally reported across the group of companies examined by analysts at Fitch.
For example, aggregate operating return on average equity (ROAE) was 6.9% in 2018, up from 4.8% in the previous year, reflecting improved underwriting results for the period.
In 2018, North American P&C insurers also faced flat investment yields, declining shareholder equity and modest capital returns, Fitch noted.
In December, Fitch revised its outlook for the U.S P&C sector from negative to stable, reflecting improved market fundamentals. The firm’s ratings outlook remains stable for the industry’s commercial and personal lines.