US Property-Casualty Performance Remained Weak through Third Quarter

US property-casualty insurers' statutory financial performance remained weak through the first 9 months of 2023, largely as a result of deterioration in personal lines performance, according to Fitch Ratings.

While the property-casualty segment should generate modestly better underwriting results and profits in 2024, it faces ongoing risk from catastrophe exposures and loss-cost uncertainty in many segments, the rating agency said.

Despite strong 9 percent growth in earned premiums for the first 9 months of 2023, overall statutory results suffered from continued weak auto insurance performance and above-average catastrophe losses from a large number of convective storm events, Fitch said. US property-casualty insurers' industry underwriting combined ratio rose to 103.5 percent in the first 9 months of this year, compared with 102.3 percent during the same period of 2022.

US property-casualty net earnings decreased 28 percent versus the prior year period to $17.4 billion due to higher underwriting losses that were offset somewhat by increased investment income, Fitch said.

The sector's annualized net income return on policyholders' surplus for the 9-month period was well below the historical average at 2.4 percent, Fitch said. Policyholders' surplus was down 1 percent from the end of 2022 at $970 billion.

Fitch said that underwriting performance remains "widely divergent" between the personal lines and commercial lines sectors. While a return to personal lines underwriting profits will take some time, the commercial lines sector will report another overall underwriting profit in 2023, Fitch said.

The commercial lines direct loss ratio was relatively consistent year over year through the first three quarters at 58 percent, the rating agency said. Commercial lines direct written premium growth slowed to 7 percent through the first 9 months of 2023 from 11 percent during the same period last year.