US Property-Casualty Results Poised for Modest Improvement in 2024

After a difficult 2023, US property-casualty insurers should see modest improvement in their results in 2024, according to Fitch Ratings.

In its 2024 sector outlook report, Fitch said that a recovery in the personal auto line will contribute to statutory profit improvements for US property-casualty (P&C) insurers.

The rating agency's projections for 2024 include continued strong industry premium growth, with improvement moderated by a combined ratio that will remain above 100 percent and a return on surplus of approximately 5 percent, which Fitch said will still be below historical norms.

Fitch is maintaining a neutral outlook for the US property-casualty industry and said its outlooks for the individual commercial and personal lines sectors remain neutral as well. Fitch said that the industry's meager financial results in 2023 reflect larger year-over-year underwriting losses and lower statutory earnings, driven by poorer personal auto and homeowners performance.

"Following 2 years of large underwriting losses, auto results will show more material improvement as rate increases take hold and claims severity trends moderate, though a return to segment underwriting profits is less likely," Fitch Managing Director Jim Auden said in a statement. "Countering the auto rebound are continued challenges P&C insurers are facing in managing catastrophe exposures and loss-cost uncertainty in many segments amid higher inflation and growing claims litigation activity and costs."

Fitch said that the commercial lines sector continues to generate underwriting profits. The sector's underwriting gains might narrow in 2024, but pricing trends are expected to remain largely positive for insurers, the rating agency said. Property and commercial auto remain the lines with the greatest performance uncertainty, Fitch said.

An elevated number of convective storm events in 2023 resulted in the year's catastrophe losses exceeding prior norms despite a lack of large hurricane events, Fitch said.

"Primary insurers are likely to retain a higher piece of catastrophe losses going forward as recent reinsurance renewal periods led to notable increases in catastrophe reinsurance attachment points for many insurers," Mr. Auden said.