A.M. Best just released its six-month assessment of 2017. The report is titled A.M. Best First Look–2Qtr 2017 U.S. Property/Casualty Financial Results. It notes a $5.1 billion underwriting loss for the first six-months of the year and compares it to a $2 billion loss in the same time period a year ago. Here are the reasons:
• There was a 6.1% jump in incurred losses and loss adjustment expenses
• There was a 1.8% rise in underwriting expenses
• Both outpaced the 3.7% growth in net premiums earned
The report says the combined ratio fell by 0.9% to 100.9%. It is the worst showing for a six-month period in the last five years. And when you leave out the $7.2 billion favorable reserve development in the last six months, the combined ratio falls even farther to 103.7.
• Net income fell by 29% to $15.4 billion
• That compares to $21.6 billion of income in 2016
• Even though net income declined, industry surplus hit a record $703.4 billion
• That is driven by a $14 billion increase in unrealized gains
A different report from QBE paints another dreary story. It says 2017 is likely to end up as being the most expensive natural disaster year in history. The pre-tax impact in North America alone will hit earnings by $600 million.
Losses for large individual risk and catastrophe claims will go as high as $1.75 billion.
The heavy hurricane season in the U.S. is taking its toll but P&C insurers and reinsurers entered the season with the ability to pay $1.3 trillion in claims. Analysts are saying losses of $100 billion or more does have a silver lining. It will help the industry rid itself of excess capital and could stop prices from falling.
Source links: MyNewMarkets.com, Insurance Business America, The Wall Street Journal