The U.S. property and casualty (P&C) sector’s net underwriting income for the first nine months of 2019 increased 13% on the same period last year, while the industry’s combined ratio weakened slightly from the prior year period, according to analysis by A.M. Best.
The nine-month data is derived from companies’ nine-month 2019 interim statutory statements as of November 19th, 2019 and represents an estimated 97% of the total P&C sector’s net premiums written.
The U.S. P&C industry’s net underwriting income reached $4.5 billion in the first nine months of the year, driven by growth in net earned premiums, which, year-over-year, offset increases in incurred losses and loss adjustment expenses, underwriting expenses, and policyholder dividends, says A.M. Best.
But despite the improved underwriting result and the fact that catastrophe losses accounted for 0.5 percentage points less on the combined ratio this year than in the prior year, the nine-month 2019 combined ratio for the P&C sector weakened by 0.5 percentage points, to 98%.
In the first nine-months of 2019, the U.S. P&C industry benefited from $8.6 billion of favourable reserve development, down more than $4 billion from the favourable reserve development recorded in the same period last year. Excluding the $8.6 billion, and the sector’s accident year combined ratio for 2019 was 99.6%, versus 100.1% for the same period in 2018.
Net investment income also improved year-over-year for the U.S. P&C space, up by $1.1 billion in 2019 which contributed to a 4.5% increase in pre-tax operating income to $48.5 billion, says A.M. Best.
At the same time, industry net income remained flat at $49.5 billion, driven by a $2.1 billion reduction in realised capital gains. While industry surplus, at $821 billion, increased by 9.5% from the end of 2018, driven by a $43.8 billion change in unrealised gains.