AM Best reported Friday that first-quarter net underwriting income for the U.S. property/casualty industry rose 4.6 percent to $3.3 billion.
Explaining the result, AM Best said that a 10.5 percent jump in net earned premiums and a 39.7 percent drop in policyholder dividends more than offset increases in incurred losses and underwriting expenses.
This preliminary financial review is detailed in a Best’s Special Report, “First Look: Three-Month 2022 U.S. Property/Casualty Financial Results,” and the data is derived from companies’ three-month 2022 interim statutory statements that were received as of May 20, 2022, representing an estimated 95 percent of the total P/C industry’s net premiums written and 96 percent of policyholder surplus.
According to the report, the combined ratio for the P/C industry improved marginally to 96.3 in the first quarter of 2022 from 96.6 in the first quarter of 2021, with catastrophe losses making up 3.3 points of the first-quarter 2022 result and 8.7 points of the comparable period in 2021.
Favorable prior-year loss development of $5.1 billion shaved 3.1 points off the first-quarter 2022 combined ratio but it was less of a factor in first-quarter 2022 than in first-quarter 2021. Prior-year loss reserve takedowns of $6.5 billion in 2021’s first quarter took 4.3 points off the combined ratio back then.
Overall P/C industry net income rose 46 percent to $29.0 billion for the quarter, the report said, noting that even though realized capital gains fell more than 12 percent and tax expense jumped by about the same percentage, pretax operating income rose by $10 billion, or 59 percent—mainly as a single company transaction (a $10.8 billion extraordinary distribution of cash and Treasury bills to Columbia Insurance Company from a non-insurance affiliate).
Despite the increase in net income, unrealized losses of $29 billion dampened the increase in industry surplus, which rose just 0.5 percent.