P/C Insurers Report $1.7B Underwriting Loss in First 9 Months of 2016

Private U.S. property/casualty insurers suffered a $1.7 billion net underwriting loss in the first nine months of 2016-following a $7.3 billion net underwriting gain in nine-months 2015-and experienced a drop in net income after taxes to $31.8 billion from $44.1 billion a year earlier, according to ISO, a Verisk Analytics business, and the Property Casualty Insurers Association of America (PCI).

Insurers’ combined ratio deteriorated to 99.5 percent in nine-months 2016 from 96.9 percent in nine-months 2015, and net written premium growth slowed to 2.8 percent in nine-months 2016 from 4.1 percent a year earlier. Net investment income dropped to $33.0 billion in nine-months 2016 from $34.9 billion a year earlier, and realized capital gains decreased to $5.6 billion from $8.8 billion, resulting in $38.6 billion in net investment gains for nine-months 2016, down $5.1 billion from a year earlier.

Direct insured property losses from catastrophes striking the United States totaled $17.4 billion in nine-months 2016, up from $13.1 billion a year earlier and above the $15.9 billion average nine-months direct catastrophe losses for the past ten years.

Insurers’ net income after taxes fell to $10.1 billion in third-quarter 2016 from $13.1 billion in third-quarter 2015, and their combined ratio worsened to 99.0 percent in third-quarter 2016 from 95.7 percent a year earlier.

Their annualized rate of return on average surplus dropped to 5.9 percent in third-quarter 2016 from 7.8 percent a year earlier.

Net written premiums rose $3.1 billion, or 2.3 percent, to $139.2 billion in third-quarter 2016 from $136.1 billion in third-quarter 2015.

Source: Verisk Analytics