The U.S property and casualty (P&C) re/insurance industry posted strong results over the first nine months of 2018, improving its net underwriting income significantly due to growth in net written premiums and relatively flat losses, according to A.M. Best.
The rating agency’s First Look report found that net premiums written grew by an average of 11.3% for the sector, while policyholder dividends increased by a modest 3.0%, offsetting a 12.2% increase in underwriting expenses
The increase in written and earned premiums outpaced growth in incurred losses and expenses for the period and resulted in an improved combined ratio of 97.6%.
Catastrophe losses returned to a more normalised level over the first nine months of 2018, accounting for just 5.1 points of the combined ratio for the period, compared with 9.9 points in 2017.
Net premium written growth included a $1.9 billion increase in premiums at National Indemnity and a combined $9.3 billion increase in premiums at four Chubb Group companies, the report noted, as members of the legacy ACE intercompany pool terminated reinsurance agreements with Bermuda and Swiss affiliates and entered into a new agreement with ACE American.
The industry’s results also reflected a $6.2 billion increase in net investment income, A.M. Best said, driven by Liberty Mutual and National Indemnity, as well as a $5.0 billion improvement in other income.
Coupled with the strong underwriting improvement, this offset a $5 billion decline in realised capital gains and a $4.8 billion increase in taxes incurred, boosting industry net income to $49.1 billion, a $27.1 billion increase from the prior-year period.
The improvement in net income plus $2.8 billion in contributed capital also offset $23.9 billion in stockholder dividends, resulting in industry surplus growing 4.3% from the end of 2017 to $775.2 billion.