The US P&C industry recorded a $24.3 billion net underwriting loss in the first nine months of 2022, down $17.9 billion from the prior year period, according to data from AM Best.
The rating agency noted that 8.4% growth in net earned premiums and a 22.3% decline in policyholder dividends during this period were countered by a 14.0% increase in incurred losses and LAE and a 6.5% rise in other underwriting expenses.
The personal lines segment, specifically the auto lines of business, were primarily responsible for the decline in underwriting results.
AM Best compiled data in this report are from companies that account for an estimated 97% oof total industry net premiums written and 96% of policyholder surplus to reach these conclusions.
Analysts also reported that personal lines losses and Hurricane Ian’s impact caused the industry’s combined ratio deterioration to 102.8%, with catastrophe losses thought to have accounted for 7.0 percentage points on the 9M combined ratio, down from 8.2 points last year.
Excluding $6.6 billion of favorable reserve development during the period (up from $6.4 billion of favorable reserve development), the accident year combined ratio for the industry was 104.0%.
The decline in pre-tax operating income was mitigated to 19.3%, as a $10.8 billion distribution of cash and Treasury bills received by Columbia Insurance Company earlier in the year boosted net investment income for the industry by 29.8%.
With tax expense down 54.2% and realized capital gains down 67.5%, the industry’s net income slid 26.3% to $29.1 billion.
AM Best further noted that industry surplus declined 11.0% from the end of 2021, to $919.6 billion, as $37.9 billion of net income, contributed capital, and other surplus gains was reduced by $27.7 billion of stockholder dividends and a combined $113.3 billion change in unrealized losses at National Indemnity Company, Columbia Insurance Company and State Farm Mutual.