Underwriting margins fall slightly for North American property/casualty insurers: Fitch

North American property and casualty (P&C) insurers have seen modestly weaker underwriting margins, Fitch Ratings has found.

Fitch said it saw a six-month aggregate combined ratio of 94.7 percent for 47 companies, relatively unchanged from 94.3 percent for the same period a year earlier.

It said higher investment income had helped to keep operating performance steady during the first half of 2019 as it offset modestly weaker calendar-year underwriting margins.

Fitch said that recent commentary from re/insurers on earnings "frequently highlights benefits from improved pricing in numerous segments”.

“However, underlying loss ratios in aggregate were virtually unchanged period to period. Changes in the group's combined ratio were more greatly influenced by reductions in favourable loss reserve development, offset by lower expense ratios and catastrophe related losses,” the ratings firm added.

Christopher Grimes, director, insurance at Fitch said. "Improved pricing in many product lines is likely to support performance through the second half of the year. Overall improvement in full year results will again hinge on second half catastrophe experience.”

Fitch said it expected Hurricane Dorian to have a meaningful impact on second-half results. However, the ratings agency added that it will take some time for damage estimates to emerge and uncertainty remains regarding subsequent tropical storm events.

Operating earnings for the first half of 2019 for the group were up 4 percent, compared with the first half of 2019, said Fitch. Operating return on average equity (ROAE) was unchanged at 8.3 percent. Twenty-three of the 47 companies reviewed reported an operating ROAE above 10 percent for the period.

Fitch maintained stable sector and rating outlooks for both the US P&C and global reinsurance sectors.

Get all the latest re/insurance industry news with our daily newsletter -  sign up here.

Main insurers facing Dorian impact in US states flagged up ​ ILS holds up despite hurricanes, typhoons and earthquakes, says broker ​ Marsh and Construction Risk Partners agree to part ways​ ​ Chaucer expands Asia Pacific treaty capabilities with AXA XL hire​ ​ Capsicum Re bolsters cyber unit with slew of hires following Swiss Re collaboration​ ​ Pioneer expands renewable energy team with HDI hire​ ​ Willis Re names new life & health leader to oversee next phase of growth​ ​ Beach & Associates continues London wholesale expansion with JLT Re duo​

Feature:  10 ways insurers are using insurtech to drive new business