Catastrophes hit profitability at private US P&C insurers in 2016
Catastrophes hit profitability at private US property and casualty insurers in the first nine months of 2016. The combined ratio fell to 99.5% from 96.97% for the same period in 2015. Compared to the ten-year average of $15.9bn, US direct insured property losses from catastrophes rose from $13.1bn to $17.4bn YoY for the three quarters, according to data from ISO and the Property Casualty Insurers Association of America. Munich Re stated earlier in January that global natural catastrophe losses for the whole of 2016 hit a four-year high of $50bn.

Private U.S. property/casualty insurers suffered a $1.7 billion net underwriting loss in the first nine months of 2016-following a $7.3 billion net underwriting gain in nine-months 2015-and experienced a drop in net income after taxes to $31.8 billion from $44.1 billion a year earlier, according to ISO, a Verisk Analytics business, and the Property Casualty Insurers Association of America (PCI).

Insurers’ combined ratio deteriorated to 99.5 percent in nine-months 2016 from 96.9 percent in nine-months 2015, and net written premium growth slowed to 2.8 percent in nine-months 2016 from 4.1 percent a year earlier. Net investment income dropped to $33.0 billion in nine-months 2016 from $34.9 billion a year earlier, and realized capital gains decreased to $5.6 billion from $8.8 billion, resulting in $38.6 billion in net investment gains for nine-months 2016, down $5.1 billion from a year earlier.

Direct insured property losses from catastrophes striking the United States totaled $17.4 billion in nine-months 2016, up from $13.1 billion a year earlier and above the $15.9 billion average nine-months direct catastrophe losses for the past ten years.

Insurers’ net income after taxes fell to $10.1 billion in third-quarter 2016 from $13.1 billion in third-quarter 2015, and their combined ratio worsened to 99.0 percent in third-quarter 2016 from 95.7 percent a year earlier.

Their annualized rate of return on average surplus dropped to 5.9 percent in third-quarter 2016 from 7.8 percent a year earlier.

Net written premiums rose $3.1 billion, or 2.3 percent, to $139.2 billion in third-quarter 2016 from $136.1 billion in third-quarter 2015.

Source: Verisk Analytics