The U.S. property and casualty insurance industry reported a $1.5 billion net underwriting loss for the first half of 2016 — ending a profit streak of more than 3 years, according to results released by the Insurance Services Office and the Property Casualty Insurers Association of America.
Net income after taxes dropped 30 percent to $21.7 billion in the first half of 2016, down from $31 billion a year earlier.
According to Steven Weisbart, senior vice president and chief economist at the Insurance Information Institute, the deteriorated results stem from incurred losses and loss adjustment expenses that spiked 8.1 percent in the second quarter, and by 7.2 percent for 2016′s first half. Direct insured property losses from catastrophes striking the United States totaled $13.5 billion for year's first half, up from $10.7 billion a year earlier and above the $11.6 billion first-half average for the past 10 years.
In addition, "Overall profit was also weaker because results from investing the industry's assets also deteriorated in the first half of 2016 versus the comparable period in 2015: net investment gains were $26.5 billion in the first half of 2016, compared to $31.6 billion in 2015, down 16 percent," Weisbart wrote in an analysis.
Insurers' combined ratio deteriorated to 99.8 percent in the first half of 2016, from 97.6 percent the year previous. In the same timeframe, net written premium growth slowed to 3 percent, versus 4.1 percent in 2015, the report says.
According to Weisbart, different segments of the industry say different premium flows. Net written premium growth for personal lines insurers was 6 percent in the first half of 2016, but commercial lines insurers fell by 0.9 percent.
Second-quarter results
Insurers' net income after taxes fell to $8.3 billion in the second quarter, down from $12 billion in 2015Q2. The combined ratio worsened to 102.1 percent, from 99.4 percent a year earlier, the report says.
However, net written premiums rose 2.9 percent in the 2016Q2, but still down from a 4.5 percent increase in 2015′s second quarter.
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