P/C Insurers’ Underwriting Income Fell 53% in First Quarter: AM Best

The U.S. property/casualty industry saw its net underwriting income fall in first-quarter 2021 by 53% as compared with the same prior-year period, according to preliminary financial results analyzed by AM Best.

Increased incurred losses, loss adjustment expenses and underwriting expenses, as well as a 72% rise in policyholder dividends, were behind the underwriting income decline, according to a report from AM Best. Underwriting income declined despite 2.3% growth in net earned premiums in the quarter.

The report notes the combined ratio for the property/casualty industry deteriorated to 96.4 from 95.0 in the first quarter of 2020. Catastrophe losses accounted for an estimated 6.9 points on the three-month 2021 combined ratio, up from an estimated 3.3 points in first-quarter 2020.

The financial review is detailed in Best’s Special Report, “First Look: Three-Month 2021 Property/Casualty Financial Results.” The data is derived from companies’ three-month 2021 interim statutory statements received June 1, representing an estimated 99% of the total P/C industry’s net premiums written. With net investment declining, the drop in underwriting income drove a 12.9% reduction in pre-tax operating income. As tax expenses were down 18.4% and realized capital gains were up $4.1 billion, industry net income increased by 11.4% from the same prior-year period to $20.2 billion.