Every year Verisk and the American Property Casualty Insurance Association (APCIA) release a report on the state of the insurance industry’s finances. That report was just released and finds net income rose from $60.3 billion to $61.9 billion.
It’s not a big increase and the jump has been impacted by an underwriting loss of $3.8 billion. That loss offsets the $5.2 billion underwriting gain from 2020.
Robert Gordon of the APCIA said premium growth increased 7.4% to $685 billion but the 11.1% increase in loss adjustment expenses (LLAE) offset those gains.
“Insurers’ combined ratio increased to 99.6 (from 98.6), and investment yields dropped to their lowest level since at least 1960,” Gordon in a statement that accompanied the report.
Policyholder surplus rose $122.5 billion because of $110 billion in investment gains. That pushed the policyholder surplus close to $1 trillion for the first time in history. However, Verisk’s Neil Spector said some of those gains may have been lost because of troubles in the bond and equity markets earlier this year.
“This capital cushion bolsters insurers’ ability to respond to future claims as well as looming uncertainties in capital markets, global political risks and record inflation,” Spector said.
Gordon agrees, “While the industry balance sheet is strong enough to meet the commitments to insureds, it is facing emerging challenges from the significant and increasing impact of catastrophic weather events, cyber risk and significant price and social inflation/lawsuit abuse,” he said.
Here are the details starting with net written premiums for all four quarters of 2021:
Quarter 1 — 4.9%
Quarter 2 — 10.3%
Quarter 3 — 12.8%
Quarter 4 — 8.9%
$3.8 billion net underwriting loss in 2021
The 2020 net underwriting was a gain of $5.2 billion
Net income after taxes 2021 — $61.9 billion
Net income after taxes in 2020 — $60.3 billion
In 2021 net written premium growth — 9.2%
Net written premium growth 2020 — 2.6%
Combined ratio 99.6 in 2021
2020’s combined ration was 98.6%
Industry surplus in 2021 — $1,032.5 billion
Up from $910.1 billion at the end of 2020
Up from September of 2021 when it was $974.8 billion
Investment yield — 2.6%
Down from investment yield in 2020 — 2.7%
Total capital gains in 2021 — $109.2 billion
2020 total capital gains — $49.8 billion
Source link: Insurance Journal — https://bit.ly/3NIWiHl
Source link: Business Insurance — https://bit.ly/3N4bLSr
Property Casualty Profit & Loss in 2021
About PIA Western Alliance
The Professional Insurance Agents Western Alliance is a membership organization promoting and enhancing the success of independent agencies seeking to grow, learn and be heard within the industry.
PIA WESTERN ALLIANCE VALUES OUR STERLING PARTNERS