The US property / casualty (P/C) industry recorded a US$24.5 billion net underwriting loss in the first half of 2023, nearly eclipsing the US$26.5 billion in losses recorded for all of 2022, according to a new report by global credit rating agency, news publisher and data analytics provider AM Best.
According to the report, the personal lines segment – specifically the homeowners’ line of business – was mainly responsible for the decline in underwriting results. Personal lines losses contributed to the industry’s combined ratio deterioration to 104.5. AM Best estimated that catastrophe losses accounted for 9.6 points on the six-month 2023 combined ratio.
The US$24.5 billion loss in the first half of 2023 compares with a US$6.6 billion loss recorded for the same prior year period, underscoring the ongoing headwinds that US P / C insurers face. These include rising loss costs, above-average catastrophe activity, and adverse trends in personal automotive.
“Secondary perils continued to drive poor loss experience as we see in the catastrophe losses for the first half of 2023,” said Christopher Graham, Senior Industry Research Analyst at AM Best.
According to the report, the underwriting loss, coupled with an eight per cent decline in net investment income earned, drove pre-tax operating income down 69.5 per cent for the sector in the first half of 2023 to US$9.4 billion. With tax expense down 16.4 per cent and realised capital gains down 40.7 per cent, the industry’s net income slid 71.9 per cent to US$8.8 billion.
The industry’s surplus increased 6.7 per cent from the end of 2022 to US$1.05 trillion, while US$75.8 billion of net income, change in unrealised gains, contributed capital, and other surplus gains was reduced by US$10.2 billion of shareholder dividends.