A.M. Best’s latest special report A.M. Best First Look — 2Qtr 2017 U.S. Property/Casualty Financial Results is out. The underwriting portion of the report doesn’t look good at all. Though it’s a preliminary report, it is based on filings of 96% of the insurers reporting to A.M. Best.
The first six months saw an underwriting decline and the reason for the decline is pressure on operating results. What makes it even more difficult to accept is the $3.1 billion in underwriting income generated two years ago. But in the first half of 2017 there was a 6.1% increase in incurred losses and loss adjustment expenses. The 1.8% jump in underwriting expenses out did the 3.7% growth in net premiums earned.
Translation: a $5.1 billion underwriting loss.
The combined ratio also fell by 0.9 points to 100.9. That decline is the worst of the last five years. That does — however — exclude the $7.2 billion in favorable reserve development.
Net income also fell by 29% when comparing the first six months of 2016 to that of 2017. It dropped to $15.4 billion and is down from $21.6 billion. The industry surplus — however — did grow to a record $703.4 billion at the end of June.
Catastrophe losses jumped 18.8% to $17.7 billion.
Source links: Insurance Journal, Carrier Management, Insurance Business America, PropertyCasualty360.com