US P&C underwriting gain rose 4.6% in Q1 on premium & reduced cat loss

US property and casualty insurers increased first quarter net underwriting income by 4.6% to $3.2 billion as a 10.5% increase in net premiums written outweighed the rise in loss costs and underwriting expense, a report by  AM Best indicated.

Net premiums earned rose by 10.5% or $17.4 billion to $183.4 billion. Premiums earned in were up at a slightly lower 9.0% rate.

Loss and loss adjustment expense se of $119.6 billion was up by a milder 10.2% or $11 billion, albeit chiefly on account of adjustments to prior periods. Most notably, cat losses are down as a portion of the whole, from 8.7 percentage points (pps) of combined ratio in 2021 to 3.3 pps in the current year.

Underwriting expenses of $48 billion were up 8% or $4 billion.

Those dynamics left the industry with a reported combined ratio of 96.3%, down 0.3 pps on the prior year period. Counting out the $1.5 billion in reduced favourable impact from prior period reserve adjustments, the industry had an accident year combined ratio of 99.3%, analysts claimed.

Adjusted for cat loss, A&E and more, a normalized combined ratio would have been up 5.2 pps to 92.9%.

By the bottom line, following both a handy 79% increase in net investment income and a massive $10.8 billion pre-tax extraordinary remittance to Columbia Insurance from a non-insurance affiliate, total net profits of $ 29 billion were up 46% year on year.

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