Despite the influence of the ongoing COVID-19 pandemic, a group of 17 U.S. property/casualty (P/C) reinsurers recorded a combined ratio of below 100% in the first-quarter of 2020, according to analysis by the Reinsurance Association of America (RAA).
At 97.4%, the group’s combined ratio did deteriorate from the 94.9% in the prior year Q1, but the fact it remains in profitable territory suggests that losses from COVID-19 perhaps weren’t coming through that significantly in the period.
The Q1 2020 combined ratio is comprised of a 72.2% loss ratio and a 25.2% expense ratio, compared with 70.8% and 24.1% in the same period last year, respectively.
Overall, the group of P/C reinsurers achieved an underwriting gain of $28.6 million, which is down on the $541 million recorded a year earlier.
In Q1 2020, 11 of the cohort of reinsurers fell to an underwriting loss. However, it appears that the more than $376 million of underwriting profit reported at National Indemnity in the period, more than offset underwriting losses at other firms, resulting in an overall underwriting gain.
Combined, net investment income reached more than $2.6 billion in the first-quarter of 2020, which is slightly higher than what was recorded last year.
The analysis by the RAA shows that the group of 17 reinsurers wrote gross premiums of more than $21 billion in Q1 2020, up on the $19.1 billion recorded in Q1 2019. Net premiums written jumped from $13.7 billion in Q1 2019 to $16.5 billion in the opening three months of this year, while net premiums earned reached over $15 billion, against $13.1 billion in the first-quarter of last year.
In total, net income across the group amounted to $2.94 billion in the first-quarter of 2020, which represents a slight decline from the $3.1 billion announced in the first-quarter of 2019.
Policyholders’ surplus, notes the RAA, declined from $209.9 billion at December 31st, 2019 to $171.3 billion as at the end of March, 2020.
The impact on reinsurers’ underwriting operations and investment portfolios from the COVID-19 pandemic has varied in the opening three months of the year. Although Q1 results provided some insight into where virus losses are appearing, the outlook remains very uncertain and while it’s expected that more is to come, exactly what these losses look like and how large they might be is unclear.
