The US property/casualty (P/C) insurance industry reported a net underwriting gain of $4.1 billion for the first nine months of 2024, reversing a $32.1 billion loss in the same period the previous year, according to a report by AM Best.
The improvement was driven by a 9.5% growth in net earned premiums, which outpaced a 1.3% increase in incurred losses and loss adjustment expenses (LAE) and a 9.2% rise in other underwriting expenses. The personal lines segment played a key role in the turnaround, contributing significantly to better underwriting results.
The industry’s combined ratio improved to 97.9 for the period, down from 102.7 a year earlier. Catastrophe losses were estimated to account for 8.8 points of the 2024 nine-month combined ratio, compared to 10.0 points in the prior year. Adjusting for $8.5 billion in favorable reserve development during the period, the accident year combined ratio stood at 99.2.
Pre-tax operating income surged 261.7% to $65.9 billion, bolstered by the underwriting gain and a 22.1% increase in earned net investment income.
A $21.2 billion shift in net realized capital gains across three Berkshire Hathaway Insurance Group companies further contributed to the industry’s financial performance, leading to a doubling of net income to $130 billion compared to the prior year.
Furthermore, AM Best report that industry surplus grew to $1.1 trillion as of the end of September 2024, reflecting a combination of $131.4 billion in net income and contributed capital, partially offset by an $11.6 billion change in unrealized losses, $1.4 billion in other surplus losses, and $15.4 billion in stockholder dividends. Stockholder dividends were significantly lower, declining 83.9%, due to an $82 billion asset distribution recorded by National Indemnity Company in 2023.
The results underscore shifting dynamics in the US P/C industry, influenced by a mix of improved underwriting conditions, higher investment income, and reduced catastrophe losses.
What do you think these financial changes signal for the broader insurance market? Share your thoughts in the comments.
