In the first nine months of 2016, U.S. property/casualty insurers suffered a $1.7 billion net underwriting loss, down sharply from a $7.3 billion net underwriting gain in the first nine months of 2015.
Net income after taxes stood at $31.8 billion in 2016 from January to September, down from $44.1 billion a year earlier, according to data from ISO, a Verisk Analytics business, and the Property Casualty Insurers Association of America (PCI).
Property losses totaled $17.4 billion in nine-months 2016, up from $13.1 billion a year earlier and above the $15.9 billion average over the past ten years. Insurers’ combined ratio was at 99.5 percent in the nine-month period in 2016 compared to 96.9 percent in 2015. Net written premium growth slowed to 2.8 percent for 2016 down from 4.1 percent a year earlier.
“The industry’s results continued to decline in the first nine months of 2016. Higher catastrophe losses and less favorable reserve development pushed the combined ratio above 99 percent and resulted in a net underwriting loss for the second quarter in a row,” Beth Fitzgerald, president of ISO Solutions, said.
Fitzgerald said policyholders’ surplus reached a record high of $688.3 billion.
“Although property/casualty insurance industry surplus and premium-to-surplus ratios continue to be historically strong, financial operating results deteriorated in almost all categories,” Robert Gordon, PCI’s senior vice President for policy development and research, said. “Profitability has been sluggish; and premium growth, underwriting gains, pretax operating and net income, and combined ratios have all worsened,”
The poor performance is partly due to increasing loss ratios in the auto lines, which saw rising accident frequency and severity, Gordon said.
“The combined ratio for personal lines insurers deteriorated to 102.9 percent, with significant increases in personal auto loss ratios,” Gordon said. “Commercial auto loss ratios also increased. As we move forward, it’s important for all the stakeholders—including consumers, insurers, and policymakers—to take significant steps to reduce the growth of auto losses.”
In the third quarter, insurers’ net income after taxes fell to $10.1 billion from $13.1 billion in third-quarter 2015. Their combined ratio increased to 99.0 percent in Q3 2016 up from 95.7 percent a year earlier. Net written premiums rose 2.3 percent year-over-year to $139.2 billion in the third quarter of 2016.