U.S. insurers see net income surge in 2012 Q1: Moody’s

Consistent rate increases and a relatively quiet period for natural catastrophes allowed property and casualty insurers in the United States to increase their net income by 69%, notes a report by Moody’s Investor Services.

Net written premiums were up 4% for companies in 2012 Q1 over the same quarter last year, while the industry’s combined ratio improved to 96% from 102% a year ago.

Moody’s noted tornado outbreaks in the U.S. in March were the only major cat losses affecting national and regional insurers, with estimated insured losses of $1.2 billion.

“Underwriting standards are becoming tighter in conjunction with a gradually improving cycle across most lines of business,” the company stated in its analysis, U.S. P&C Insurers’ 1Q12 Earnings Improve on Lower Cats; Pricing Momentum Continues.

The rating service indicated that commercial lines insurers are reporting mid- to high single-digit rate increases for all lines of business, which is consistent with other market reports. 

In May, the Council of Insurance Agents and Brokers (CIAB) reported that small, medium and large account pricing increased an average of 4.4% in 2012 Q1, compared with a 2.9% decrease for the same time period in 2011.

“We’ve been cautious up to now about declaring a market turn, but I think it’s reasonable to say that the market has made a hard turn after two quarters of price increases and tighter underwriting,” said CIAB president and CEO Ken Crerar. “It’s difficult to predict length and severity, but the market has turned.”