Reduced Underwriting Income for Property-Casualty Industry

According to A.M. Best, the US property-casualty industry's net underwriting income declined by 9.6 percent to $4.8 billion in the first half of 2019, compared with $5.3 billion in the same prior-year period. This is based on data derived from companies' 6-month 2019 interim statutory statements that were received as of August 20, 2019, representing an estimated 97 percent of the total property-casualty industry's net premiums written. 

The rating agency said net earned premiums grew by 3.8 percent in the first half of 2019, and underwriting expenses and policyholder dividends were stable; however, this was offset by a 5.6 percent increase in losses and loss adjustment expenses incurred. As a result, the combined ratio for the property-casualty industry weakened by 1 percentage point from the prior-year period to 97.4.  

A.M. Best estimates catastrophe losses accounted for 4.5 percentage points on the 6-month 2019 combined ratio, up from an estimated 4.2 percentage points in the prior-year period. 

A $432 million increase in net investment income during first-half 2019 offset most of the underwriting decline, resulting in pretax operating income remaining unchanged at $33.1 billion. Due to a $1.2 billion reduction in realized capital gains, industry net income declined 2.4 percent from the prior-year period to $32.7 billion.

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