P/C Insurers See Drop in Net Income

By | November 6, 2017

The year has been hard on the nation’s property/casualty insurers but don’t fret — the industry still remains profitable.

According to ISO, a Verisk business, and the Property Casualty Insurers Association of America (PCI), the private U.S. property/casualty insurance industry saw its net income after taxes drop to $15.5 billion in first-half 2017 from $21.8 billion in first-half 2016 — a 29.2 percent decline — and its overall profitability as measured by its annualized rate of return on average policyholders’ surplus fall to 4.4 percent from 6.4 percent.

The decline in profitability came from some $17.1 billion in direct catastrophe losses — $3.2 billion above the direct catastrophe losses for first-half 2016, the report said.

Insurers’ combined ratio deteriorated to 100.7 percent for first- half 2017 from 99.7 percent for first-half 2016.

Industry financial results for the first six months of 2017 continued to deteriorate in most categories.

The good news: premiums are trending up.

Net written premium growth rang in at 4.1 percent for first-half 2017, the same growth rate as for first-half 2015 and an improvement from 3.1 percent for first-half 2016.

Net investment gains increased to $27.1 billion in first-half 2017 from $26.6 billion for first-half 2016.

The industry’s surplus reached a new all-time-high value of $717.0 billion as of June 30, 2017, increasing $16.1 billion from $700.8 billion as of Dec. 31, 2016.

“Industry financial results for the first six months of 2017 continued to deteriorate in most categories,” said Robert Gordon, PCI’s senior vice president for policy, research and international.

While the worsening in the personal auto line seems to have slowed, Gordon said auto losses will sharply increase in the third quarter from hurricane losses. “Property catastrophe losses increased in the first half of 2017 on top of the already significant increases in 2016,” he said in a statement.

The industry surplus continued to grow steadily, reaching an all-time high in the first half of 2017. That’s good news, says Beth Fitzgerald, senior vice president, industry engagement, ISO. “That growth is important, as the industry is facing significant losses from recent catastrophes, including Hurricanes Harvey, Irma, and Maria.”

ISO serves insurers, reinsurers, agents and brokers, insurance regulators, risk managers, and other participants in the property/casualty insurance marketplace.

PCI is a trade association representing nearly 1,000 insurance companies.

About Andrea Wells

Andrea Wells is a veteran insurance editor and Editor-in-Chief of Insurance Journal Magazine. More from Andrea Wells

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Insurance Journal West November 6, 2017
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