U.S. P&C insurance industry had first full year of underwriting profit last year since 2007: Swiss Re

The United States property and casualty insurance industry recorded an underwriting profit in 2013 for the first time since 2007, while inland marine premiums in 2013 were up 9.4% over 2012 and catastrophe losses during the fourth quarter of 2013 were “way below average for the period from 1995-2013,” with 86% originating from one series of severe storms Nov. 17-18, Swiss Re reported this week.

In 2013, the U.S. P&C industry had an “underwriting gain” of $15.1 billion, compared to an underwriting loss of $11.4 billion in 2012, Swiss Re reported in its U.S. Property & Casualty Quarterly report, released Monday. All figures are in U.S. dollars.

The industry-wide loss ratio was 66.5% in the fourth quarter of 2013, down from 79.1% in Q4 2012, Swiss Re reported. The full-year loss ratio was 74.3% in 2012, down from 79.4% in 2011. Swiss Re predicts the loss ratio for the full year will be 68% in 2013 and 70% in 2014.

For the quarterly numbers up to and including 2013, Swiss Re quoted from SNL Data, excluding mortgage and financial guarantee insurers. For its annual figures for 2011 and 2012, Swiss Re quoted A.M. Best Company while the forecasts for full-year 2013 and 2014 are from Swiss Re Economic Research and Consulting.

The industry-wide combined ratio was 107.9% in 2011 and 103.0% in 2012, Swiss Re noted, while the reinsurer predicts the combined ratio will be 97% in 2013 and 99% in 2014.

Across all personal lines, direct written premiums in 2013 were 4% higher than in 2012. The growth in personal lines was 5.3% in 2013 and 4.8% in 2012. The growth in 2013 was “supported by rate increases for the homeowners segment,” Swiss Re noted.

“Despite a 6.8% year-on-year increase in invested assets, investment income declined 2.4%” to US$47.6 billion in 2013, “reflecting lower reinvestment rates,” Swiss Re reported.

The U.S. P&C industry reported $1 billion in direct insured catastrophe loses in Q4 2013, from one winter storm and two thunderstorm events, Swiss Re noted. Those losses “were down significantly” from Q4 2012 and “way below average for the period from 1995-2013,” according to the report.

The largest single event in the last three months of 2013 was a thunderstorm system that caused US$883 million in direct insured losses, or 86% of the direct insured catastrophe losses.

The Associated Press reported Nov. 18, 2013 that a “wave of thunderstorms brought damaging winds and tornadoes to” Indiana, Illinois, Michigan, Wisconsin, Iowa, Missouri, Ohio, Kentucky, Tennessee, West Virginia, Pennsylvania and western New York.

Published reports indicate more than 70 tornadoes touched down Nov. 17 to 18.

Elsewhere in the report, Swiss Re included a chart showing growth in direct written premiums for commercial lines for full-year 2013, over 2012. Swiss Re quoted from both SNL Data and statutory filings.

“All commercial lines hardened somewhat in Q413,” Swiss Re noted, with workers compensation, directors and officers liability and employment liability “showing the strongest” rate increases.

The total growth was 4.7% across all commercial lines, with the industry reporting a combined total of $258.8 billion in direct written premiums in commercial lines.

The line with the highest premium total was workers compensation, at $48.985 billion up 7% over 2012. The line with the greatest percentage premium increase was inland marine, up 9.4% over 2012 to $17.24 billion in 2013. Meanwhile direct written premiums in “other liability occurrence” were up 7.5% to $33.9 billion while other liability-claims made was up 6.3% to $19.6 billion.

Ranking second and third, by total premiums, were fire and allied combined (up 2.6% year over year to $41.76 billion),  and commercial multi-peril (up 3.9% to $37.6 billion) respectively.