The U.S. property/casualty (P/C) industry recorded a $24.5 billion net underwriting loss in the first half of 2023, nearly eclipsing the $26.5 billion in total losses recorded for all of 2022, according to a new AM Best report.
These preliminary results are detailed in a new Best’s Special Report, titled, “First Look: 6-Month 2023 US Property/Casualty Financial Results,” and the data is derived from companies whose six-month 2023 interim period statutory statements were received as of Aug. 30, 2023. These companies account for an estimated 98% of total industry net premiums written and 98% of policyholder surplus.
According to the report, the personal lines segment, specifically the homeowners’ line of business, was primarily responsible for the decline in underwriting results. Personal lines losses contributed to the industry’s combined ratio deterioration to 104.5. AM Best estimates that catastrophe losses accounted for 9.6 points on the six-month 2023 combined ratio. The $24.5 billion loss in the first half of 2023 compares with a $6.6 billion loss recorded for the same prior year period, and underscores the ongoing headwinds such as rising loss costs, above average catastrophe activity, and adverse trends in personal auto, that U.S. P/C insurers face.
“Secondary perils continued to drive poor loss experience as we see in the catastrophe losses for the first half of 2023.” said Christopher Graham, senior industry research analyst, AM Best.
The underwriting loss, coupled with an 8.0% decline in net investment income earned, drove pre-tax operating income down 69.5% for the sector in the first half of 2023, to $9.4 billion, according to the report. With tax expense down 16.4% and realized capital gains down 40.7%, the industry’s net income slid 71.9%, to $8.8 billion. The U.S. P/C industry’s surplus increased 6.7% from the end of 2022, to $1.05 trillion, as $75.8 billion of net income, change in unrealized gains, contributed capital, and other surplus gains was reduced by $10.2 billion of stockholder dividends.
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=335561 .