After consistently weak sector results for almost two years, the US P&C insurance industry registered its best opening quarter underwriting result in over 15 years in 2024, according to a new report from Swiss Re.
The re/insurer observed that strong premium gains and easing claims cost inflation contributed to a combined ratio of 94% in Q1, while higher investment yields provided an additional boost.
Meanwhile, the industry return on equity (ROE) was reportedly 14% in Q1 of 2024, with Swiss Re maintaining its forecasts for a full-year ROE of 9.5% and 10% in 2025.
Swiss Re is also maintaining its premium growth estimate at 8% for 2024 and 5% for 2025, but with upside risk after 10% growth in Q1 of 2024.
The firm’s report added, “In Q1 2024, net premiums earned were up 12% from a year earlier, while net claims incurred were flat. We expect this favourable differential between premiums and claims to persist through 2024.”
As per the report, industry growth remained at 10% in Q1 of 2024, with personal lines premiums up 15% and commercial lines up just 5%.
“After Q1 2024 results, we see upside risk to our growth forecast. Personal auto rate increases exceeded 6% in each of the 18 months through May 2024.2 In contrast, commercial lines growth has weakened as rate increases subside,” Swiss Re said.
The firm continued, “Fire & Allied premium growth slowed rapidly to just 4% yoy in 1Q24 after 14% growth in 4Q23 – the slowest growth rate in over five years. Premiums for Other Liability Claims-Made policies – a statutory line that includes E&O, D&O, and Cyber Liability – shrank for the 7th consecutive quarter.
“Strong Commercial Auto Liability growth and a rebound in Other Liability-Occurrence premiums provided an offset.
“Growth is heavily influenced by the underwriting cycle but supported by exposure growth: we forecast that US real GDP, a broad exposure proxy, will grow by 2.2% in 2024 and 1.9% in 2025.”
