Profitability Up for P&C Insurers in Q1

Private U.S. P&C insurers' net income after taxes rose from $13.9 billion in the first quarter of 2014 to $18.2 billion in Q1 2015. Measured by their rate of return on average policyholders' surplus, insurers' overall profitability grew from 8.4% to 10.8%, according to ISO, a Verisk Analytics business, and the Property Casualty Insurers Association of America.

In the same period, insurers' overall combined ratio improved to 95.7% in Q1 2015, compared to 97.1% in first quarter of 2014, and net underwriting gains increased from $2.4 billion to $4.1 billion.

For the first quarter of the year, net written premium growth remained unchanged at 3.7%, which is below the 4.3% average for the last 12 quarters and the 4.1% growth rate for full-year 2014. Net written premiums came in at $125.9 billion in the first quarter 2015.

In the same time period, net investment income rose to $11.7 billion, up from $11.2 billion a year prior.

The first quarter of 2015 saw net investment gains of $16.4 billion after capital gains jumped from $2.9 billion to $4.7 billion, increasing net investment income by $500 million to $11.7 billion. Since the start of ISO's quarterly records in 1986, this marks the highest first-quarter capital gains and net investment gains realized.

“The industry needs to focus on underwriting, as investment gains may be unpredictable and investment yields will likely remain suppressed for a while,” says Beth Fitzgerald, president of ISO Insurance Programs and Analytic Services. “It's those insurers that stay current on emerging issues and make use of predictive analytics that will be the best prepared to weather potential storms that the markets, social or technological developments, or nature might send their way.”