Increasing incurred losses continue to hinder underwriting results, according to A.M. Best research. The Property & Casualty industry reported a first-quarter net underwriting loss of $841.5 million, Best states in its latest “First Look” report.
That’s significantly less than the $2 billion net underwriting profit recognized in Q1 2016 — and the only first-quarter underwriting loss reported over the last five years, according to Best.
What’s more, based on responses from its quarterly survey, Best estimates P&C industry three-month-2017 catastrophe losses of $7.6 billion, up 48% from the same period of 2016 and accounting for six points on the industry’s overall combined ratio.
A 3.3% increase in underwriting expenses also contributed to the reported combined ratio of 99.7. After adjustment for loss reserve development, the reported accident-year combined ratio rose 2.1 points to 104.0 — the worst of the last five Q1 periods, Best reported.
Net investment income grew 9.5% to $11.9 billion during first quarter 2017, but nearly halfof that was offset by a $5.9 billion loss in other income, Best reported, reflecting the impact of a retroactive reinsurance contract entered into in February by AIG and National Indemnity in which the latter agreed to provide $20 billion of aggregate cover on much of AIG’s commercial book — covering losses unpaid as of Jan. 1, 2016.
Despite the decline in net income (partly resulting from the AIG reinsurance deal), P&C industry surplus reached a record $696.9 billion at the end of March — driven by an $8.5 billion increase in unrealized gains, an increase in other surplus gains and a reduction in stockholder dividends.
The data contained in Best’s report are from companies whose three-months-2017 interim period statutory statements were received as of May 17. Those companies represent an estimated 96% of total industry net premiums written, and 94% of policyholder surplus.
Source for chart below: A.M. Best
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
