U.S. P/C insurance catastrophe losses in 2017 reached $53 billion in 2017, a surge of close to 110 percent compared to 2016, according to a new A.M. Best report.
As expected, insured losses from hurricane and wildfire events in the latter part of the year drove much of the results and established some new records.
Among them: “2017 marked the first year since 2005 that four hurricanes made U.S. landfall in one season,” according to A.M. Best.
The ratings agency pointed out that a Category 3 hurricane or worse hadn’t made U.S. landfall since 2005. But in 2017, Hurricanes Harvey, Irma and Maria struck the U.S. in rapid succession, all making landfall as Category 4 storms. After that trio, Hurricane Nate made landfall as a Category 1 storm, making the four-hurricane record.
These storms, combined with historic wildfire damage in California, led to the insured catastrophe loss record, A.M. Best explained.
The last time insurers reported record U.S. P/C insurance catastrophe losses was in 2011, at a painful but much lower number of just under $42 billion, as A.M. Best said. Those results included losses related to the Tohoku earthquake and the subsequent tsunami in Japan. Thailand floods and an active U.S. tornado season that year also contributed to the catastrophe loss.
Other data from 2017, from the A.M. Best report:
- Incurred losses and loss adjustment expenses for 2017 rose 8.5 percent from 2016. This apparently “more than offset” the 3.5 percent jump in net premium earnings for the year. According to A.M. Best, the increased losses helped drive the net underwriting loss to $23.5 billion compared to $5.5 billion in 2016.
- The industry’s combined ratio for the year came in at 103.8, a three-point deterioration versus 2016 and also the worst of the last five years.
- One thing that helped was a $5.6 billion jump in net investment income earned in 2017, though it was mostly offset by a $5.2 billion loss in other income. This reflected the impact of a retroactive reinsurance contract AIG and National Indemnity signed in February 2017, A.M. Best said.
- Net income for the P/C industry was $40.8 billion, down 1.7 percent from 2016.
- The P/C industry surplus grew 6.8 percent in 2017 versus 2016, hitting $733.8 billion. This was driven by a jump in unrealized capital gains, though it was offset by a $17.5 billion dip in other surplus gains and a $4.4 billion jump in stockholder dividends.
The full A.M. Best report is called: First Look – 2017 Property/Casualty Financial Reports.
Source: A.M. Best