Top 25: P/C Direct Premium Written Up 4.8 Percent

By | August 7, 2017

Direct premium written (DPW) for property/casualty insurance companies continues to increase, albeit gradually. At year-end 2016, approximately $606 billion of DPW was reported, a record high for the industry. For 2016, total DPW for all P/C insurers aggregately increased 4 percent over 2015, an increase of $23.4 billion. Through the first quarter of 2017, the insurance industry’s growth trend has continued, as DPW for all P/C insurers aggregately increased 4.8 percent over 2016.

For the three months ending March 31, 2017, P/C companies comprising the Top 25 insurers in terms of DPW growth increased their DPW nearly 14 percent over the first three months of 2016. This continues the Top 25 insurers’ impressive display of premium growth and financial stability.

The Top 25 accounted for 55 percent of the growth in the P/C insurance industry’s DPW.

In contrast, the remainder of the industry reported an increase in DPW of 2.6 percent, or $3.1 billion year-over-year.

It is important to note that while increasing DPW, P/C companies have aggregately maintained a sufficient level of policyholders’ surplus (PHS). One measure that indicates P/C companies are conservatively leveraged is the DPW to PHS ratio. An insurer’s DPW to PHS ratio is indicative of its premium leverage on a direct basis, without consideration of the effect of reinsurance. Since 2010, this ratio for P/C companies has remained stable at approximately 70 percent.

There is always a fair amount of uncertainty in making projections based on first quarter data, but if the industry holds to its 10-year historical pattern, growth in 2017 would again result in the highest level of year-end direct premium written ever reported by the P/C insurance industry.

About Douglas A. Powell

Powell is a senior financial analyst with Demotech Inc., a Columbus, Ohio-based financial analysis firm. Web site: More from Douglas A. Powell

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Insurance Journal West August 7, 2017
August 7, 2017
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