Net premiums written grew, but more slowly in Q1 2014 (2.7%) than in the same period the year before (4.6%). Direct premiums written (DPW) grew 3.8%, compared to 5.3% a year ago. In workers' comp, A.M. Best says DPW grew 5.4%, compared to 11.1% in Q1 2013.

Explaining the slower premium growth, A.M. believes “market conditions are becoming more competitive, driven by reinsurance capacity, capital availability and customer resistance to price increases, particularly in more desirable classes and for more desirable insureds.”

Personal lines Q1 net income was $4.7 billion, down slightly from $4.9 billion a year ago. Higher realized capital gains and lower income taxes partially offset lower pretax operating income ($4.7 billion compared to $5.6 billion), A.M. Best says.

Top-line growth continues as insurers were still able to get rate increases, mainly on the homeowners' side, but also in auto liability to a lesser extent.

A.M. Best notes that decreases in net premiums written, net premiums earned and net loss and loss adjustment expense were attributed primarily to the impact of Geico's execution of a 50% loss-portfolio agreement and the implementation of a 50% quota-share reinsurance agreement with its affiliate, National Indemnity Co.

The calendar-year combined ratio through the first three months of 2014 was a profitable 98.9, compared to 96 at the same point last year. The accident-year combined ratio, which does not include $9.1 billion in favorable prior-year reserve development, was 115.5. However, says A.M. Best, “when the Geico transaction is excluded, the ratio is 101.5 and is comparable to the accident-year combined ratio of 101.6 through the first quarter of 2013.”

While the commercial-lines segment saw profitable Q1 underwriting results, performance deteriorated. The combined ratio was 97.8, compared to 90.6 in Q1 2013, with the increase attributable to less favorable prior-year reserve development, higher catastrophe-related charges, higher relative expense ratios and less-favorable core accident-year loss performance.

A.M. Best analysts view reserve levels as deficient and compounded by the concern that the more recent accident years' reserves were established by some commercial-lines companies at levels that might not account for a change in macroeconomic conditions or the potential for an increase in claims costs associated with medical and other inflationary pressures.

Rate increases moderated, and growth for the segment is impacted by workers' comp, which accounts for about 20% of commercial-lines DPW. A.M. Best explains that workers' comp rates had begun rising earlier than most other lines—as early as 2011.

The industry's surplus was up 1.4% in Q1 2014, down from Q1 2013's pace of 3.3%. Still, surplus stands at a record $671.8 billion.