The US property and casualty (P&C) insurance industry reported a net underwriting gain of $3.8 billion for the first half of 2024, marking a significant improvement from the $24 billion loss recorded in the same period of 2023, according to a report from AM Best.
The recovery was driven by an 11.3% increase in net earned premiums, which helped offset a 2.5% rise in incurred losses and loss adjustment expenses (LAE) and a 24.9% increase in other underwriting expenses.
The improvement in the personal lines segment was primarily responsible for the turnaround in the industry’s underwriting results. The combined ratio for the industry improved to 97.7 in the first half of 2024.
Catastrophe losses accounted for 7.4 points on the combined ratio, down from 9.7 points during the same period in 2023, which had been impacted by record losses from severe convective storms. Without $8 billion in favorable reserve development during the first six months of 2024, the industry's accident year combined ratio stood at 99.4.
The underwriting gains, along with a 26.6% increase in net investment income, contributed to a 374.4% rise in pre-tax operating income, reaching $47.3 billion. A $50 billion swing in net realized capital gains at National Indemnity Company further boosted the industry's overall performance, leading to a sharp increase in net income from $9.4 billion in the first half of 2023 to $97.6 billion this year.
Industry surplus also saw growth, rising to $1.1 trillion by the end of the first half of 2024. This was supported by $100.6 billion in combined net income and contributed capital, though it was partially offset by a $23 billion change in unrealized losses, $2.1 billion in other surplus losses, and $13.3 billion in stockholder dividends.
AM Best noted that while catastrophe losses have declined relative to last year, they continue to impact underwriting performance. However, the industry's ability to generate investment income and favorable reserve development has contributed to its strong financial results in 2024.
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