P/C Insurer Results: Profit Inched Up in First 9 Months of 2015

February 5, 2016

Private U.S. property/casualty insurers’ net income after taxes grew to $44.0 billion in the first nine months of 2015 from $37.8 billion in nine-months 2014, with insurers’ overall profitability as measured by their rate of return on average policyholders’ surplus growing to 8.8 percent from 7.6 percent.

According to an analysis by the ISO and the Property Casualty Insurers Association of America (PCI), insurers also improved their combined ratio to 96.9 percent for nine-months 2015 from 97.7 percent in nine-months 2014.

Net written premium growth increased to 4.1 percent for nine-months 2015 from 4.0 percent for nine-months 2014. Net investment income increased to $34.8 billion for the first nine months of 2015 from $34.5 billion a year earlier, and realized capital gains increased slightly to $8.9 billion from $8.8 billion, resulting in $43.7 billion in net investment gains for nine-months 2015.

“Insurers overall had another strong quarter. Surplus and premium to surplus continue to hover near historic levels, underscoring insurers’ rock-solid financial foundation and ability to serve consumers,” said Robert Gordon, PCI’s senior vice president for policy development and research. “However, premium growth continues to be sluggish for commercial lines.”

Gordon also said some industry statistics indicate that the combined ratio for personal auto insurance has worsened, driven by increases in both accident severity and frequency.

Beth Fitzgerald, president of ISO Solutions, noted that insurers continued to face a difficult investment environment last year. Their annualized investment yield was just 3.1 percent. That was “significantly” below long-term averages and it’s unlikely to improve in the immediate future, she said.

Third-Quarter Results

The property/casualty insurance industry’s consolidated net income after taxes rose to $13.1 billion in third-quarter 2015, up from $11.8 billion in third-quarter 2014.

Property/casualty insurers’ annualized rate of return on average surplus increased to 7.8 percent in third-quarter 2015 from 7.0 percent a year earlier.

Net written premiums rose $5.3 billion, or 4.1 percent, to $136 billion in third-quarter 2015 from $130.7 billion in third-quarter 2014. The industry’s combined ratio worsened to 95.7 percent in third-quarter 2015 from 95.5 percent in third-quarter 2014

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Latest Comments

  • February 5, 2016 at 2:19 pm
    Agent says:
    Yogi, did you notice the little blurb that Personal Auto is still giving carriers trouble on frequency and severity. More rate taking will be the result. GEICO, Allstate, St... read more
  • February 5, 2016 at 11:25 am
    Yogi Polar Berra says:
    I would have liked to see how much reserve releases, or increases, contributed to the industry's net income in each time period. Commercial versus personal lines splits would... read more
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