Property and casualty (P&C) insurers in the US remained profitable in the first half even as 26% was sliced from their net income.

The US P&C industry combined ratio was 97.5%, compared with 97.3% in first-half 2019, industry results from Verisk and the American Property Casualty Insurers Association (APCIA) revealed.

Insurance Information Institute Chief Economist Steven Weisbart says the results are unusual as insurance premiums, claims and investments are generally associated with the economic activity that the insurance is bought to protect.

“That has not been the case in the second quarter of 2020 because the recession that started in March developed despite an otherwise-healthy economy, a major part of which was suddenly shut down in order to cope with the spread of a massive severe public health threat,” Mr Weisbart said.

“Premium growth is now experiencing its longest sustained period of gains in a decade. Fundamentally, the P&C insurance industry remains quite strong financially.”

Verisk’s data analytics company ISO estimates that direct premium grew by about 2.1% in the first half of 2020, compared to 4.5% growth in the first half of 2019. Broken down by quarter, direct premiums written grew 4.5% in the first quarter but fell 0.2% in the second quarter.

The second quarter – which saw the fastest descent into the steepest U.S. economic contraction since the Great Depression — was “not nearly as tough for the financial performance of the P&C insurance industry as we had expected, so the first half overall remains an attractive one,” Mr Weisbart said.

Nominal GDP contracted by 5.2% in the first half in the US, yet III says January-June was by most measures financially successful for insurers writing auto, home and business insurance, with revenue and capital both up.

Net premium written in the first half rose 2.8% while losses and loss adjustment expenses nudged up 0.8%. The industry posted net underwriting gains of $US4.6 billion ($6.54 billion).

“Although down from the first halves of both 2018 and 2019, it is still the third largest in a first half in the last dozen years and the sixth in the past eight years,” III says.

Net income was still strong at $US24.3 billion ($34.57 billion), down sharply from $US32.8 billion ($46.66 billion) a year earlier but above the median of the past 12 first-half years.