The U.S. property/casualty (P/C) insurance sector grappled with a challenging nine-month period in 2023, posting a staggering $32.2 billion net underwriting loss, according to a report by AM Best.
This represents a $7.6 billion deterioration compared to the same period in the prior year.
AM Best’s data, compiled from companies whose interim statutory statements were received by December 4, 2023, underscores the severity of the industry’s struggle, capturing approximately 99% of total net premiums written and 98% of policyholder surplus.
The personal lines segment emerged as the primary contributor to the P/C industry’s combined ratio of 103.4 during the nine-month period, reflecting a 0.7-percentage-point decline from 2022.
Catastrophe losses played a significant role, accounting for an estimated 9.8 percentage points on the combined ratio, up from 7.3 points in the same period in 2022.
Despite witnessing a 9.7% growth in net earned premiums and a 2.2% reduction in policyholder dividends, the industry faced headwinds with an 11.9% surge in incurred losses and loss adjustment expenses (LAE), totaling $476.4 billion.
Coupled with an increase in other underwriting expenses, the underwriting loss caused a 28.4% decline in pre-tax operating income, settling at $19.9 billion.
Notably, earned net investment income remained relatively stable at $51.4 billion, mirroring the previous year’s figures.
However, a significant $50 billion change in net realised capital gains at National Indemnity Company led to a noteworthy turnaround, with the industry’s net income more than doubling to $65.7 billion.
