Verisk: US P&C industry sees net income plunge

06-10-2017

Verisk Analytics has announced that the private US property/casualty insurance industry saw its net income after taxes drop by 29.2 percent year on year to $15.5 billion in first-half 2017.

According to ISO, a Verisk business, and the Property Casualty Insurers Association of America (PCI) the overall profitability as measured by its annualized rate of return on average policyholders' surplus fell to 4.4 percent from 6.4 percent.

"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 somewhat, 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. Fortunately, industry surplus, bolstered by three straight quarters of large unrealized capital gains, continued to climb to a record $717 billion. Hurricanes Harvey, Irma, and Maria may wipe out some or all of the industry's profits in 2017, but most insurers remain historically well capitalized, generally well reinsured, and in a rock-solid position of financial strength to respond to consumer needs. Unfortunately, many consumers will never fully recover from the storms, underscoring the need for expanded flood insurance coverage, stronger building requirements, and more resilient communities."

ISO/PCI said that the industry experienced $17.1 billion in direct catastrophe losses — $3.2 billion above the direct catastrophe losses for first-half 2016. Insurers' combined ratio deteriorated to 100.7 percent for the first half of 2017 from 99.7 percent for first-half 2016.

Net written premium growth recovered to 4.1 percent for the first half of 2017, an improvement from 3.1 percent for first half of 2016. Net investment gains increased to $27.1 billion in the first half 2017 from $26.6 billion for the first half of 2016.

Verisk Analytics, US, Property Casualty Insurers Association of America

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