The U.S. property/casualty insurance private market produced a $4.7 billion net underwriting profit over the first nine months of 2018, according to a new report from ISO/Verisk and the American Property Casualty Insurance Association. That compares to a $21 billion net underwriting loss a year earlier.
Where did the improvement come from? Verisk/APCI said that two factors contributed to the turnaround, including a “rare decline in overall losses and loss adjustment expenses (catastrophe costs declined), and robust premium growth.
Loss and loss adjustment expenses dipped 0.5 percent to $310.2 billion over the first
Overall LLAE decreased 0.5 percent to $310.2 billion in nine-months 2018, thanks largely to a $13.1 billion dip in catastrophe-related LLAE.
Other results from the report:
Net written premiums grew 11.4 percent to $468.8 billion over the first nine months of 2018. Organic premium growth and changes many insurers made to their reinsurance arrangements helped drive this.
Net investment income grew to $40.9 billion in nine-months 2018, versus $35.4 billion through the first nine months of 2017. Large dividends from insurers’ subsidiaries that do not operate in property/casualty insurance helped drive the results. Overall, insurers’ net income after taxes more than doubled to $49.5 billion through the 2018 third quarter, versus $22.4 billion over he same period in 2017.
The stellar results won’t likely continue for Q4. ISO, a Verisk Analytics business, warns that the Q4 California wildfires and fall hurricanes will likely adversely affect full-year catastrophe results.
Here are Q3 U.S. P/C industry results:
Net income after taxes rose to $15.5 billion in Q3 2018, from $6.9 billion in Q3 2017. Their combined ratio improved to 99.7 in third-quarter 2018 from 110.7 a year earlier.
Their annualized rate of return on average surplus more than doubled to 8 percent in third-quarter 2018 from 3.8 percent a year earlier.
Net written premiums rose 8 percent in third-quarter 2018, compared with 4.2 percent in third-quarter 2017.
Sources: ISO/Verisk, APCI