After suffering underwriting losses for seven quarters in a row, private U.S. property and casualty (P&C) insurers recorded net underwriting income of $4.2 billion in the first-quarter of 2018, according to analysis by ISO, a Verisk business, and the Property Casualty Insurers Association of America (PCI).
When compared with the first-quarter of 2017, private U.S. P&C insurers saw their net income, after taxes, increase by more than 117% to $17.1 billion, assisted by lower catastrophe losses and higher reserve releases.
ISO reports that losses and loss adjustment expenses from catastrophes fell from $7.7 billion in Q1 2017 to $5 billion in Q1 2018, while favourable reserve development amounted to $7.4 billion this year, compared with $5.5 billion in the first-quarter of last year.
As a result, the group of private U.S. P&C insurance companies recorded net underwriting income of $4.2 billion in the first-quarter of 2018 and a combined ratio of 94.6%, on the back of underwriting losses for seven consecutive quarters.
“This year, the industry’s first-quarter underwriting results were the best since the third quarter of 2013, with significant improvements in insurers’ combined ratios and net income after taxes. However, the results were likely impacted by market shifts that are rippling through the industry caused by last December’s federal tax reform,” said Robert Gordon, PCI’s Senior Vice President (SVP) for Policy, Research and International.
Net written premiums increased by almost 16% for insurers, compared with just 4% a year earlier. At the same time, earned premium growth also accelerated, from 3.5% to 9.4%. ISO reports that the net premiums were impacted by numerous insurers adjusting their use of offshore reinsurance and retaining more risk within the U.S., while direct premium growth was boosted by the strengthening of the U.S. economy.
“As we move through the hurricane season, insurers remain well capitalized to help pay the catastrophe claims that may arise. But the question is whether they can offer coverages and pricing that respond to the newly emerging needs of customers,” said Neil Spector, President, ISO.