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U.S. insurance industry sees slight year-over-year increase in net premiums written in first half


October 22, 2012   by Canadian Underwriter


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The financial performance of the United States property and casualty insurance market improved year-over-year during the first six months of 2012, as net reported catastrophe losses dropped, according to A.M. Best Company Inc.

In its six-month financial review announced Monday, Oldwick, N.J.-based A.M. Best reported that total pretax accident-year catastrophe losses, net of reinsurance and reinstatement premiums, were estimated at $13.2 billion.

“This is slightly less than half of the $27.1 billion in net reported catastrophe losses for the same period of 2011,” A.M. Best stated. All figures are in U.S. currency.

Net premiums written for the first six months were up 4% year-over-year, from $219.8 billion in 2011 to $228.6 billion this year. Direct premiums written were up year-over-year for nearly all categories broken out in a chart, with workers compensation premiums up 10.9% and ocean and inland marine up 8.9%.

“Catastrophe losses, while remaining elevated compared with recent years¹ experience, declined significantly from 2011 record levels,” the company stated in a press release.

Catastrophe losses in June included two major series of hail storms in the U.S. but the “overall position” of the property and casualty insurance industry is strong, “even after a record catastrophe year in 2011,” A.M. Best noted.

The report noted that a “significant portion” of drought-related crop losses in 2012 will be borne by the Federal Corp Insurance Administration but “private insurers are expected to have potentially historical crop losses in 2012.” However, the report notes that “a limited number of insurers write crop insurance.”

Net income in the industry nearly tripled year-over-year, from $7 billion in the first six months of 2011 to $20.4 billion this year, according to A.M. Best.

Investment income for the first six months dropped slightly year-over-year, from $25.1 billion in 2011 to $24.2 billion this year, as “income from fixed-income securities has been declining due to lower rates paid on funds reinvested at maturity.”


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