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American P&C insurers’ net income drops in 2014


January 26, 2015   by Canadian Underwriter


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Private property and casualty insurers in the United States saw net income fall $5.1 billion to $37.7 billion in the first nine months of 2014 over the same period the year before, ISO, a Verisk Analytics business, and the Property Casualty Insurers Association of America (PCI) reported Monday.

Companies’ overall profitability for the first three quarters of 2014, measured by their annualized rate of return on average policyholders’ surplus, fell to 7.6% from 9.4% in the first nine months of 2013.

Net written premiums rose $14.0 billion, or 3.9%, to $377.0 billion for the first nine months of 2014 from $363.0 billion in the same period of 2013. Net earned premiums rose $14.3 billion, or 4.1%t, to $362.3 billion from $347.9 billion.

According to ISO’s Property Claim Services unit, catastrophes striking the United States in the first three quarters of 2014 caused $14.7 billion in direct insured losses (before reinsurance recoveries) for all insurers (including residual market insurers and foreign insurers and reinsurers), up $2.9 billion compared with the $11.8 billion in the same period of 2013, but $4.0 billion less than the $18.8 billion average for nine-month direct catastrophe losses during the past ten years.

Insurers’ pretax operating income fell $8.9 billion to $36.6 billion in 2014 from $45.5 billion in the first nine months of 2013.

“The decrease in insurers’ pretax operating income was largely driven by deterioration in underwriting results, with net gains on underwriting falling to $4.3 billion in nine-months 2014 from $10.3 billion in nine-months 2013,” the PCIAA reported.

“The combined ratio – a key measure of losses and other underwriting expenses per dollar of premium – deteriorated to 97.7% for nine-months 2014 from 95.8% for nine-months 2013,” according to ISO and PCI.


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