Data on the performance of a group of U.S. property and casualty (P&C) reinsurers for the first nine months of 2017 reveals deterioration of the combined ratio in light of an increased loss ratio when compared with the previous year, according to the Reinsurance Association of America (RAA).
RAA’s latest update on the performance of eighteen U.S. P&C reinsurance companies highlights the impacts of an intense period for market participants, underlined by the impacts of hurricanes Harvey, Irma, and Maria, as well as other notable third-quarter catastrophe events.
RAA reports that the group’s combined ratio for the first nine months of 2017 reached 111.9%, which resulted in a net underwriting loss of $4.3 billion. This is compared to a combined ratio for the group of 94.9% for the same period in 2016, and a net underwriting gain of just over $1 billion.
Of the eighteen companies tracked by RAA in its data, just one recorded a combined ratio of below 100% for the first nine months of 2017, compared to just three firms recording a combined ratio of above 100% in the same period in 2016.
As a result of the active hurricane season and other events, such as the Mexico earthquakes, the group recorded a loss ratio of 88.1% in 2017, compared with a loss ratio of 69.8% for the same period last year.
The expense ratio for the first nine months of 2017 totalled 23.8%, so slightly lower than the 25.1% recorded in 2016.
Net investment income increased year-on-year by roughly $1 billion to $6.1 billion in 2017. However, an other income loss of $6.2 billion in 2017, compared with an other income loss of just $307 million in the first nine months of 2016 hurt companies’ performance.
The result of all the above is a net loss of $493 million for the group for the first nine months of 2017, compared with net income of $6.3 billion for the same period in 2016.
Reinsurance News discussed previously how RAA data showed that U.S. reinsurers profits had fallen throughout 2016, a trend that continued into 2017 and then accelerated as catastrophe losses mounted in the third-quarter, offsetting any year-on-year premium gain for the group.
