Profits up for US insurers

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2 July 2012

A significant increase in property and casualty insurers’ net income and improved underwriting results have boosted the US market, according to first-quarter industry results of the Property Casualty Insurers Association of America and property/casualty insurance risk analyst ISO.

US property and casualty insurers’ net income has risen to $US10.1 billion ($9.86 billion) in the first quarter of this year, up from $US7.8 billion ($7.62 billion) in the first quarter of last year.

The report also says insurers’ overall profitability, measured by their rate of return on average policyholders’ surplus, climbed to 7.2% from 5.6%.

Net losses on underwriting declined to about $US200 million ($195.3 million), down from $US4.5 billion ($4.4 billion) in first-quarter 2011.  

The improved underwriting results are due mainly to a drop in net losses and loss adjustment expenses from catastrophes.

ISO estimates that insurers’ loss adjustment expenses from catastrophes fell to $US3.4 billion ($3.32 billion) in the first quarter, compared to $US6.6 billion ($6.4 billion) for the same quarter last year.

Partially offsetting the improved underwriting results, net investment gains dropped $US1.2 billion ($1.17 billion) to $US12.3 billion ($12.01 billion) in the first quarter, from $US13.6 billion ($13.3 billion).

However, pre-tax operating income grew to $US11.8 billion ($11.5 billion) in the first quarter, up from $US8.6 billion ($8.4 billion).

“The 7.2% rate of return for the first quarter is insurers’ highest first-quarter annualised rate of return since the 13.3% for the first quarter of 2007,” the report says.

The figures are consolidated estimates for at least 96% of all business written by US property and casualty insurers.