U.S. P/C Q1 2022 Underwriting Income Up 5%: AM Best

AM Best reported Friday that first-quarter net underwriting income for the U.S. property/casualty industry rose 4.6% to $3.3 billion.

Explaining the result, AM Best said that a 10.5 percent jump in net earned premiums and a 39.7% drop in policyholder dividends more than offset increases in incurred losses and underwriting expenses.

This preliminary financial review is detailed in a Best’s Special Report, “First Look: Three-Month 2022 U.S. Property/Casualty Financial Results,” and the data is derived from companies’ three-month 2022 interim statutory statements that were received as of May 20, 2022, representing an estimated 95% of the total P/C industry’s net premiums written and 96% of policyholder surplus.

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According to the report, the combined ratio for the P/C industry improved marginally to 96.3 in the first quarter of 2022 from 96.6 in the first quarter of 2021, with catastrophe losses making up 3.3 points of the first-quarter 2022 result and 8.7 points of the comparable period in 2021.

Favorable prior-year loss development of $5.1 billion shaved 3.1 points off the first-quarter 2022 combined ratio but it was less of a factor in first-quarter 2022 than in first-quarter 2021. Prior-year loss reserve takedowns of $6.5 billion in 2021’s first quarter took 4.3 points off the combined ratio back then.

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Overall P/C industry net income rose 46% to $29.0 billion for the quarter, the report said, noting that even though realized capital gains fell more than 12% and tax expense jumped by about the same percentage, pretax operating income rose by $10 billion, or 59%—mainly as a single company transaction (a $10.8 billion extraordinary distribution of cash and Treasury bills to Columbia Insurance Company from a non-insurance affiliate).

Despite the increase in net income, unrealized losses of $29 billion dampened the increase in industry surplus, which rose just 0.5%.

Topics USA Trends Profit Loss Underwriting AM Best Property Casualty