[October 05, 2015] |
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A.M. Best Special Report: U.S. Property/Casualty Industry Posts Improved Underwriting Results, Net Income in First-Half 2015
Growth in net premiums written remains solid and with continuing
benign loss trends, the U.S. property/casualty (P/C) industry posted
improved underwriting results and net income through the first six
months of 2015, according to a special report by A.M. Best.
The Best Special Report, titled, "Property/Casualty Posts
Improved Underwriting Results and Net Income During First Half of 2015,"
states that these improvements were offset by increased stockholder
dividends and other changes in surplus and unrealized capital losses. As
a result, policyholders' surplus was essentially unchanged at June 30,
2015, at USD 683.7 billion, from its prior-year position despite the
improved net earnings.
Some of the highlights from this report include:
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Underwriting expense growth has outpaced premium growth through the
first two quarters of 2015, with total underwriting expenses for the
industry up 4.5%, to USD 71.7 billion;
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The overall industry recognized a higher level of favorable
development of prior years' core (i.e., not related to asbestos and
environmental losses) loss reserves, with the combined ratio
benefiting from 3.6 points of favorable development, up from 3.3
points during the first six months of 2014. The combined ratio for the
total P/C industry in first-half 2015 was 97.8, an slight improvement
from the 99.0 recorded in the same period in 2014;
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The commercial lines segment recorded a 5.4% increase in direct
premiums writen through June 30, 2015, to approximately USD 134.7
billion, up from approximately USD 127.8 billion during the same
period last year. Key drivers of this increase continue to be workers'
compensation, other (general) liability, auto liability and inland
marine;
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Equity holdings for the total P/C industry declined by 1.9% from their
year-end 2014 value through June 30, 2015. Volatility in U.S. equity
markets have driven the decline, which reflects sales of equities and
unrealized losses on shares held at the end of the second quarter;
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Earnings for the personal lines segment through the second quarter of
2015 increased substantially from the prior year-to-date. After-tax
net income was USD 9.9 billion for the six months ended June 30, 2015,
compared with approximately USD 7.3 billion for the first six months
of 2014. The increase was attributed primarily to higher realized
capital gains and pretax operating income; and
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Pretax operating income of nearly USD 7.0 billion was up by 17.1% at
the end of the second quarter of 2015, compared with just under USD
6.0 billion for the second quarter of 2014. The underwriting loss at
mid-year 2015 was almost USD 745 million, compared with an
underwriting loss of USD 2.3 billion for the same period in 2014. An
increase in capital gains and a decline in incurred income taxes
boosted net income by 17.9% over the prior year period, to USD 31
billion.
In light of these mid-year results, the industry appears to be on track
to post a third consecutive year of underwriting profits, barring any
late year catastrophic losses.
For the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=242122.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS
RESERVED.
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