Property/Casualty Insurance Industry's Net Income Drops 42.2 Percent in First-Quarter 2017
June 26 2017 - 10:00AM
Property/Casualty Insurance
Industry's Net Income Drops 42.2 Percent in First-Quarter
2017
JERSEY CITY, N.J., June 26, 2017 - The private
U.S. property/casualty insurance industry saw its net income after
taxes drop to $7.7 billion in first-quarter 2017 from $13.4 billion
in first-quarter 2016-a 42.2 percent decline-and its overall
profitability as measured by its annualized rate of return on
average policyholders' surplus fall to 4.4 percent from 7.9
percent, according to ISO, a Verisk Analytics (Nasdaq:VRSK)
business, and the Property Casualty Insurers Association of America
(PCI).
The industry experienced $7.3 billion in direct
catastrophe losses-the highest first-quarter catastrophe losses
since the 1994 Northridge earthquake and $2.3 billion above the
direct catastrophe losses for first-quarter 2016. Insurers'
combined ratio deteriorated to 99.6 percent for first-quarter 2017
from 97.4 percent for first-quarter 2016.
Insurers also saw some improvement from a year
earlier. Net written premium growth accelerated to 4.0 percent for
first-quarter 2017 from 3.2 percent for first-quarter 2016. Net
investment gains[1] increased
by $1.2 billion to $14.4 billion in first-quarter 2017 from $13.2
billion for first-quarter 2016. The industry's surplus[2] reached a
new all-time high value of $709.0 billion as of March 31, 2017,
increasing $8.1 billion from $700.9 billion as of December 31,
2016.
"Three major wind and thunderstorm events
each resulted in more than $1 billion in damages in first-quarter
2017. That's the first time we've seen three events of that
magnitude in the first quarter in more than 60 years. Fortunately,
insurers are well capitalized, and short-term volatility in
catastrophe losses is not affecting their ability to provide
coverage and pay claims. They're also seeing some acceleration
in premiums and investment income. However, to remain profitable
and provide appropriate returns on their capital, insurers need to
plan for the long term and continue to engage in disciplined
underwriting based on robust data and analytics."
|
"Industry operating results continued to deteriorate in the
first quarter of 2017. The combined ratio worsened to just better
than break-even, underwriting gains shifted to net losses, and
pretax operating income plummeted 60 percent as compared with the
first quarter of 2016. Additional industry data shows personal auto
loss ratio improvement in first-quarter 2017, although the rolling
four-quarter average is still worse than the rolling average at the
first quarter of last year. Unlike first-quarter personal auto
improvement, personal property lines losses increased, impacted by
an almost 50 percent increase in catastrophe losses in
first-quarter 2017 compared with the same period in 2016,
compounding the 2015-2016 increase of similar proportion.
Policyholder surplus increased slightly in real terms, and the
overall deterioration in results in first-quarter 2017 is far less
remarkable excluding a special reinsurance transaction that reduced
other income and pretax operating income by $6.3
billion."
|
Beth Fitzgerald, Senior Vice President,
Industry Engagement, ISO |
Robert Gordon, PCI's Senior Vice President for Policy
Development and Research |
View the full report from ISO and PCI here.
About ISO
Since 1971, ISO has been a leading source of information about
property/casualty insurance risk. For a broad spectrum of
commercial and personal lines of insurance, ISO provides
statistical, actuarial, underwriting, and claims information and
analytics; compliance and fraud identification tools; policy
language; information about specific locations; and technical
services. ISO serves insurers, reinsurers, agents and brokers,
insurance regulators, risk managers, and other participants in the
property/casualty insurance marketplace. ISO is a Verisk Analytics
(Nasdaq:VRSK) business. For more information, please
visit www.verisk.com/iso.
About PCI
PCI is composed of nearly 1,000 member companies, representing the
broadest cross section of insurers of any national trade
association. PCI members write more than $183 billion in annual
premium,
35 percent of the nation's property/casualty insurance. Member
companies write 42 percent of the U.S. automobile insurance market,
27 percent of the homeowners market, 32 percent of the commercial
property and liability market, and 34 percent of the private
workers' compensation market. For more information,
visit www.pciaa.net.
Contact:
Giuseppe Barone/Erin Bzymek
MWW Group (for ISO)
201-507-9500
gbarone@mww.com
ebzymek@mww.com
Jeffrey Brewer for PCI
(847) 553-3763
Loretta Worters for I.I.I.
(212) 346-5500
[1] Net
investment gains equal the sum of net investment income and
realized capital gains (or losses) on investments.
[2]
Policyholders' surplus is insurers' net worth measured according to
Statutory Accounting Principles.
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Verisk Analytics Inc. via Globenewswire
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