Net income for P&C insurers slipped slightly in the first quarter of 2014, dipping to $13.8 billion from $14.3 billion in Q1 2013, due to deteriorating underwriting results, according to a joint report released Thursday by the Property Casualty Insurers Association of America (PCI) and ISO. Overall profitability industry-wide, as measured by return on average surplus, fell to 8.4% in the quarter, compared to 9.6% in the first quarter of 2013 and 10.3% for all of 2014.
Still, despite these headline numbers, Dr. Robert Hartwig, president of the Insurance Information Institute (III), is not concerned for the industry.
“Despite an unusually costly winter, rising non-cat losses, and persistently low interest rates, the industry posted another profitable quarter aided by capital gains and reserve releases,” Hartwig wrote in a statement following the report. ”Premium growth, while still modest, is now experiencing its longest sustained period of gains in a decade. Fundamentally, the P/C insurance industry remains quite strong financially, with capital adequacy ratios remaining high relative to long-term historical averages.”
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