Analysis by Verisk reveals that during the first nine months of 2019, the private U.S. property and casualty (P&C) insurance industry recorded underwriting gains of $5.4 billion, up 15% on the $4.7 billion recorded a year earlier.
The jump in underwriting gains is mostly a result of growth in premiums and a lower impact from natural catastrophe losses, when compared with the same period in 2018. During the period, net losses and loss adjustment expenses from catastrophes fell by 17% to $21.5 billion.
As a result of the growth, the sector’s surplus expanded to reach a new high of $812.2 billion, which is growth of more than $70 billion year-on-year.
Verisk notes that both the industry’s net income after taxes and underwriting gains remained solid in the period in spite of year-on-year declines, with net income falling to $48.1 billion from $49.4 billion, while the combined ratio weakened from 97.4% to 97.8%.
Net written premiums increased by $12.8 billion in the nine month period to $481.3 billion, while net written premium growth did slow to 2.7%, compared with 11.4% for the first nine months of 2018. At the same time, net earned premium growth slowed from 9.3% in 2018 to 4.7% in 2019, reports Verisk.
Neil Spector, President of ISO, said: “The strong economy, along with a drop in catastrophe losses, has helped insurers continue to enjoy strong results and build a record surplus. But as competition grows and customer expectations rise, insurers increasingly need to boost the speed and precision of their decisions, from underwriting to claims. Those carriers equipped with robust data, powerful analytics, and experienced talent will be the best poised to meet the challenges that lie ahead.”
Robert Gordon, senior vice president for policy, research and international, APCIA, added: “The U.S. property/casualty insurers’ financial results during the first nine months of 2019 paint a picture of a strong industry with a rock-solid foundation that enables consumers to rest assured that they will be protected when they need it most.
“Insurers’ capital gains increased during 2019 as global markets rebounded from their worst quarterly fall in seven years during the fourth quarter of 2018. While insurers’ investment income and net income after taxes declined, industry surplus grew, creating an increasingly stable underwriting foundation.”
Verisk also provides details of the industry’s performance during the third-quarter of 2019, revealing that insurers’ net income fell to $15.3 billion in the period, versus $15.4 billion a year earlier. However, the combined ratio strengthened from 99.7% to 98.8% in Q3 2019.
Net written premiums also improved in Q3, jumping by more than 6% to $166.2 billion. Furthermore, the sector’s contribution of underwriting activities was essentially flat in the quarter, which Verisk notes is an improvement on the $1.3 billion underwriting loss reported in the third-quarter of 2018.
