U.S. P/C Industry Records $26.5 Billion Underwriting Loss in 2022
The U.S. property/casualty (P/C) industry recorded a $26.5 billion net underwriting loss in 2022, $21.5 billion more than the $5 billion underwriting loss reported in 2021, according to a report published by AM Best.
The underwriting loss came despite an 8.4% growth in net earned premiums and a 21.4% decline in policyholder dividends, which were countered by a 13.9% increase in incurred losses and loss adjustment expenses (LAE), as well as a 6.2% rise in other underwriting expenses, said the report, titled, “First Look: 12-Month 2022 US Property/Casualty Financial Results.”
Personal lines losses and the impact of Hurricane Ian caused the industry’s combined ratio to deteriorate to 102.7 from 99.7 in 2021, the report said. (Combined ratios above 100% indicate an underwriting loss).
AM Best estimated that catastrophe losses accounted for 6.9 points on the 2022 combined ratio, down from an estimated 7.7 points in the prior year.
Excluding $3.8 billion of favorable reserve development during the year (down from $5.7 billion of favorable reserve development in 2021 and the lowest amount of reserve releases in the last five years), the industry’s accident year combined ratio was 103.2, AM Best said.
With tax expense down 35.2% and realized capital gains down 83.2%, the industry’s net income slid 31.3% to $42.0 billion, AM Best said, noting the P/C industry’s surplus also declined 6.7% to $951.9 billion from the end of 2021.
AM Best said the data for its report is derived from companies’ annual statutory statements received as of March 9, 2023, representing an estimated 96% of the total P/C industry’s net premiums written.
Source: AM Best
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