Despite the growth in net income during the first quarter of 2018, industry surplus decline slightly from the end of 2017 to $734.1 billion

The U.S. property & casualty industry posted a combinedratio of 94.8 in first-quarter 2018, the lowest three-monthcombined ratio of the last five years, according to anew Best's Special Report, titled, “FirstLook—1Q2018 U.S. Property/Casualty Financial Results.” The combinedratio improved 4.9 points from the prior year.

First quarter recap

Following last year's extreme weather, CAT losses havereturned to a more normalized level during the first quarter. A.M.Best estimates that catastrophe losses accounted for 3.4 points onthe three-month 2018 combined ratio, down from an estimated 6.0points during the same time period last year.

The significant improvement to net underwriting income duringthe first three months of 2018 was driven by growth in net premiumswritten (NPW) of 15.2%, which offset a 3.1% increase in lossesand loss adjustment expense incurred, and a 12.7% rise in bothunderwriting expenses and policyholder dividends. NPW growth wasaided by a combined $5.3 billion increase in premiums retained inthe U.S. at four Chubb Group companies, as members of the legacyACE intercompany pool terminated reinsurance agreements withBermuda and Swiss affiliates and entered into a new agreement inwhich ACE American is now the lead company.

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Denny Jacob

Denny Jacob is an associate editor for NU PropertyCasualty360. Contact him at [email protected].