Despite the COVID-19 pandemic, the U.S. property/casualty (P/C) industry improved its overall profitability in 2020, with a 68% increase in net underwriting income and combined ratio that improved slightly over the previous year.
These preliminary results are from a new Best’s Special Report, titled, “First Look: 12 Month 2020 Property/Casualty Financial Results.” The data is derived from companies’ annual statutory statements received as of March 9, 2021, representing an estimated 95% of the total P/C industry’s net premiums written.
According to the report, a reduction in insured exposures resulting from pandemic-related stay-at-home orders and government-ordered business closures prompted some P/C insurers to provide premium credits in various forms. As a result, underwriting expenses increased by 3.8%, with some companies recording their policyholder credits as an underwriting expense rather than a reduction of premium. Dividends to policyholders increased by 76% from the prior year, as other companies provided refunds in the form of dividend payments.
Despite these increases, the P/C industry’s net underwriting income for 2020 rose to $5.4 billion in 2020, compared with $3.2 billion in 2019.
The P/C industry’s 2020 combined ratio of 98.6 was an improvement over the 98.9 recorded in the previous year. AM Best estimates that catastrophe losses accounted for 8.0 points on the combined ratio, up from an estimated 4.3 points in 2019.
Industry surplus increased 7.5% from the end of 2019 to $885.2 billion, as $62.0 billion of net income, plus $46 billion from contributed capital and the net change in unrealized gains, significantly offset $46.9 billion of stockholder dividends.
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