US P&C Insurance Market recorded a $24.3 bn net underwriting loss in the 9M2022, down $17.9 bn from the prior year period.
According to AM Best, 8.4% growth in net earned premiums and a 22.3% decline in policyholder dividends during this period were countered by a 14% increase in incurred losses and LAE and a 6.5% rise in other underwriting expenses.
Personal lines losses and Hurricane Ian’s impact caused the industry’s combined ratio deterioration to 102.8%, with catastrophe losses thought to have accounted for 7 percentage points on the 9M combined ratio, down from 8.2 points last year.
Excluding $6.6 bn of favorable reserve development during the period, the accident year combined ratio for the industry was 104%.
Industry surplus declined 11% from the end of 2021, to $919.6 bn, as $37.9 bn of net income, contributed capital, and other surplus gains was reduced by $27.7 bn of stockholder dividends and a combined $113.3 bn change in unrealized losses at National Indemnity Company, Columbia Insurance Company and State Farm Mutual.
The personal lines segment, specifically the auto lines of business, were primarily responsible for the decline in underwriting results.
The decline in pre-tax operating income was mitigated to 19.3%, as a $10.8 bn distribution of cash and Treasury bills received by Columbia Insurance Company earlier in the year boosted net investment income for the industry by 29.8%.
With tax expense down 54.2% and realized capital gains down 67.5%, the industry’s net income slid 26.3% to $29.1 bn.