Loretta Worters for I.I.I.
JERSEY CITY, N.J. — The private U.S. property/casualty insurance industry saw its net underwriting gains increase to $5.4 billion in the first nine months of 2019 from $4.7 billion a year earlier, bolstered by growth in premiums and a drop in catastrophe losses, and its surplus reach a record high of $812.2 billion, according to Verisk (Nasdaq:VRSK), a leading data analytics provider, and the American Property Casualty Insurance Association (APCIA).
The surplus grew $70.1 billion in nine-months 2019 as the stock market recovered from a significant downturn at the end of 2018.
The industry’s net income after taxes and underwriting gains remained strong despite small declines compared with the prior year. Net income after taxes declined to $48.1 billion for nine-months 2019 from $49.4 billion a year earlier, and insurers’ combined ratio deteriorated to 97.8 percent from 97.4 percent a year earlier. Net losses and loss adjustment expenses from catastrophes declined to $21.5 billion for nine-months 2019 from $26.0 billion a year earlier.
Net written premium growth slowed to 2.7 percent in nine-months 2019, after jumping 11.4 percent a year earlier; in both years, growth was significantly affected by one-time increases in net written premiums caused by the changes multiple insurers made to their reinsurance arrangements in 2018. Net earned premiums grew 4.7 percent.
“The strong economy, along with a drop in catastrophe losses, has helped insurers continue to enjoy strong results and build a record surplus,” said Neil Spector, president of ISO. “But as competition grows and customer expectations rise, insurers increasingly need to boost the speed and precision of their decisions, from underwriting to claims. Those carriers equipped with robust data, powerful analytics, and experienced talent will be the best poised to meet the challenges that lie ahead.”
“The U.S. property/casualty insurers’ financial results during the first nine months of 2019 paint a picture of a strong industry with a rock-solid foundation that enables consumers to rest assured that they will be protected when they need it most,” said Robert Gordon, senior vice president for policy, research and international, at APCIA. “Insurers’ capital gains increased during 2019 as global markets rebounded from their worst quarterly fall in seven years during the fourth quarter of 2018. While insurers’ investment income and net income after taxes declined, industry surplus grew, creating an increasingly stable underwriting foundation.”
Insurers’ net income after taxes fell to $15.3 billion in third-quarter 2019 from $15.4 billion in third-quarter 2018. Their combined ratio improved to 98.8 percent in third-quarter 2019 from 99.7 percent a year earlier.
Net written premiums rose $9.8 billion, or 6.2 percent, to $166.2 billion in third-quarter 2019 from $156.5 billion in third-quarter 2018.
The contribution of underwriting activities was essentially zero; that is, underwriting had break-even results in third-quarter 2019, which contrasts with a $1.3 billion net underwriting loss in third-quarter 2018.
View the full report from Verisk and APCIA here