U.S. P/C insurers’ net income soared in 2018, thanks in part to premium increases, higher net investment income and fewer catastrophe losses, A.M. Best concluded in a new report.

Industry net income rose to $61.4 billion in 2018, the report concluded, jumping $25.2 billion from the previous year.

Where did the gains come from?

Investment income helped, in part, jumping more than 17 percent year-over-year. Net investment income for U.S. P/C insurers was $57.4 billion in 2018 versus $49 billion the year before, A.M. Best found.

But underwriting also improved substantially. As A.M. Best noted, the industry’s combined ratio landed at 99.3, a 4.4 point improvement over 2017, with catastrophe losses returning in 2018 to more normal levels than the historic highs they hit the year before.

U.S. P/C insurers saw a 10.1 percent increase in premiums earned in 2018, at $581.4 billion compared to $528.3 billion in 2017. Net premiums written in 2018 surpassed $600 billion compared to $540.5 billion the previous year. This was offset in part by a 3.7 percent increase in losses and loss adjustment expenses incurred, a nearly 11 percent hike in underwriting expenses and an 8.6 percent jump in policyholder dividends. But the jump in premiums written and earned outpaced any increase in incurred losses, according to the report.

Some of the factors that helped shape 2018’s improved numbers include a $3.9 percent jump in premiums at National Indemnity and a $9.6 billion jump in premiums at three Chubb Group companies, A.M. Best added.

In the case of Chubb, members of the legacy ACE intercompany pool ended reinsurance agreements with Bermuda and Swift affiliates and shifted to a new deal where ACE American is the lead company as of Jan. 1, 2018 . In doing so, the U.S. saw a large boost in premiums kept in the country, according to the report.

The full A.M. Best report is “First Look: 2018 Property/Casualty Financial Results.

Source: A.M. Best