P&C insurance industry suffers largest-ever drop in surplus in Q1 2020

“Property/casualty insurers started the year with solid net written premium growth, but that was the calm before the storm,” Robert Gordon, senior vice president for policy, research and international at APCIA, said in a statement. (Credit: Shutterstock)

The surplus for the private United States property & casualty insurance industry dropped by $75.9 billion in the first quarter of 2020 — its largest-ever quarterly decline — as the stock market suffered a major downturn, according to Verisk and the American Property Casualty Insurance Association (APCIA). Since then, the COVID-19 pandemic has continued to affect many insurers and will likely impact underwriting results for the second quarter and the remainder of the year.

The surplus fell to $771.9 billion as of March 31, 2020, from the record-high $847.8 billion at the end of 2019. This drop was mostly driven by a decline in valuations of insurers’ investments. While the decline set surplus back to mid-2018 levels, traditional leverage ratios remained below their long-term averages.