US P&C industry hit by $20bn cat losses

The US property/casualty industry recorded a net underwriting loss of $20 billion for the first nine months of 2017, up from $2.3 billion loss in the same period a year ago, according to AM Best.

The third quarter of 2017 was marked by hurricanes Harvey, Irma and Maria as well as two earthquakes in Mexico, causing insured losses of around $100 billion, according to estimates.

The catastrophes so far this year are the main driver of year-to-date 2017 results, overshadowing underlying industry fundamentals. AM Best estimates US P&C industry nine-month 2017 catastrophe losses of $38.4 billion, up 89.1 percent from the same period of 2016 and eclipsing AM Best’s full-year 2012 catastrophe loss estimate of $36.1 billion, which included Superstorm Sandy. AM Best also estimates that the catastrophe losses account for 9.8 points on the combined ratio, which deteriorated by 4.3 points from the prior-year period to 104.0, marking the worst first nine-month period of the past five years.

Year-to-date 2017 net income for the industry declined 25.5 percent compared with the prior-year period to $22.9 billion. However, despite the significant decline in net income, industry surplus grew to $699.8 billion at the end of September 2017, driven by an $11.2 billion increase in unrealized gains, a slight increase in other surplus gains and a 20 percent reduction in stockholder dividends.

The data is included in AM Best’s report titled, “A.M. Best First Look—3Qtr 2017 U.S. Property/Casualty Financial Results,” and the data is derived from companies’ nine-month 2017 interim statutory statements, representing an estimated 95 percent of the total property/casualty industry’s net premiums written.

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