US P/C Industry Turns in $32.2B Underwriting Loss After 9 Months
The blame, which has been well documented lately, lies primary with the personal lines segment – specifically the homeowners lines of business and driven by a record amount of losses from convective storms.
The insurance industry rating agency earlier this month said it was keeping its negative outlook on the U.S. personal lines insurance industry. The financial performance of auto insurers has been the main reason for the outlook, but recently AM Best changed its view of the homeowners line from stable to negative. Meanwhile, AM Best maintained its stable outlook for commercial lines.
U.S. P/C surplus fell 0.3% from the prior year end to $980 billion.
AM Best said a $50 billion change in net realized capital gains at Berkshire Hathaway’s National Indemnity Company resulted in net income for the industry more than doubling to $65.7 billion.
Data was derived from companies whose nine-month 2023 interim period statutory statements were received as of Dec. 4, 2023, representing an estimated 99% of total industry net premiums written and 98% of policyholder surplus, AM Best said.
While the above certainly sounds dire, it’s important to note that the rate of insurance company losses slowed down considerably in the 3rd quarter of 2023. In 2022, industry losses for the entire year were $26.5B. As of the end of the 2023 3rd quarter, losses had already reached $24.5B. So the 3rd quarter loss of $7.7B could be considered to be “better news” if not good news. Insurance premiums will probably continue to climb in the near term, but it appears that the hard market may be getting over the hump. Joseph D Beck, CIC, CPRM, President / Beck Insurance Agency.