Personal lines yield drives underwriting earnings in US P/C industry

A recovery in personal insurance segment results was a key driver of a $3.8 billion total underwriting profit for the US property/casualty insurance industry, according to a new report from AM Best.

Best’s special report, titled “First Look: Six-Month 2024 US Property/Casualty Financial Results,” reveals the industry’s first six months of financials, which are similar to those reported by Verisk and The American Property Casualty Insurance Association at the end of the month of August. . However, AM Best’s report is more up-to-date with data derived from companies whose statutory declarations for the six-month period 2024 were received from 4 September 2024 – representing approximately 99% of all industry net premiums written. (Previous Verisk/APCIA results were based on statements for approximately 91% of the US private P/C market.)

Both reports indicated net written premiums rose just over 10%, with AM Best taking the number to $463.2 billion.

However, losses incurred increased by just 2.5% for the first half of 2024, fueling a 5.6 point decline in the industry loss rate.

With the LAE index down 0.6 points and the expense ratio down 0.4 points, AM Best expects the combined ratio for the first half of this year to be 97.7, compared to 104.4 for the first half of last year.

AM Best’s report also adds detailed information on the impact of catastrophe losses and prior-year loss trends on combined first-half rates for the 2024 and 2023 periods.

AM Best estimates that catastrophe losses accounted for 7.4 points in the combined report for the six months of 2024, down from about 9.7 points in the first six months of 2023. In 2023, the higher point total reflected the impact record losses due to severe convectives. storm losses.

AM Best also estimates that favorable reserve development of $8.0 billion in the first six months of 2024 reduced 1.7 points from the combined industry ratio (1.8 points of favorable reserve development basis reduced by 0.1 points for additional reserves for asbestos and environmental losses). In the first half of 2023, the favorable development was 0.4 points lower, removing 1.3 points from the industry’s calendar year combined ratio.

Neither the AM Best report nor the Verisk/APCIA report breaks down underwriting profit and loss figures by line of business, but an appendix to the AM Best report discloses direct premiums for each six-month period in each of the past five years.

This line-by-line summary indicates that:

• Passenger direct written premiums, accounting for more than a third of P/C direct premiums, rose 15.6% to $176.9 billion in the first half of 2024. The increase followed a 12.7% rise in the first half of 2023, compared to the first half of 2022.
• For the personal auto liability component alone, growth for the first half of 2024 was 13.7%, while premiums for the physical damage portion increased by 18.1%.
• Since the first half of 2020, direct premiums written for passenger auto liability have increased by more than 33%, according to dollar figures for the first half of 2020 ($74.2 billion) and the first half of 2024 ($99.1 billion dollars), calculated from the report. (Note: CM was unable to calculate comparable figures for physical damage as physical damage premiums for private passenger and commercial motor vehicles were reported on a combined basis for the 2020, 2021 and 2022 half-year periods).
• Over the same five-year span, homeowner premiums rose 59% to nearly $82 billion in the first half of 2024, compared to $51.6 billion in the first half of 2020.
• Direct home owner premium increases for the past two years were 14.8% for the first half of 2023 compared to the first half of 2022 and 13.5% for the first half of 2024 compared to the first half of the year 2023.
• For major commercial lines, first half 2024 direct premium growth percentages (calculated based on reported premium dollars) were 12.0% for commercial motor, 10.9% for other liability risks , -0.8% for workers’ compensation and -0.9% for other liability claims made.

Across all lines, underwriting gain of $3.9 billion, along with a 26.6% increase in net investment income, led pretax operating income to $47.3 billion, compared to 10, 0 billion in the first half of 2023, the report said.

A $50 billion change in net capital gains at National Indemnity Company sent the industry’s net income soaring to $97.6 billion in the first half of this year from $9.4 billion last year.

The industry surplus increased to $1.1 trillion as of June 30, 2024, compared to about $1.05 billion at the end of 2023.

TOPICS
USA Underwriting Market Property Casualty