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.
|Related: Fitch Ratings unveils year-end financial resultsfor P&C insurers
|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.
|Related: Insured losses from May's 'Ring of Fire'near $2.5 billion, says new report
|Not everything's pointing up
Despite the growth in net income during the first quarter of2018, industry surplus decline slightly from the end of 2017 to$734.1 billion due primarily to a combined $7.1 billion change inunrealized losses at two Berkshire Hathaway companies and StateFarm, and stockholder dividend payments totaling $6.1 billion atAllstate, Federal Insurance and National Indemnity.
|The data contained in this report are from companies whose threemonths 2018 interim period statutory statements were received as ofMay 17, 2018. These companies account for an estimated 95% of totalindustry net premiums written and 94% of policyholder surplus. Thefull report can be found on the A.M. Bestwebsite.
|Related: 2017: A bad year for commercial lines, says FitchRatings report
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