Private U.S. property & casualty insurers' net income after taxes dropped to $22.4 billion in nine-months 2017 from $32.1 billion in nine-months 2016 and its overall profitability declined to 4.2% from 6.3%, according to a report from ISO, a Verisk business, and the Property Casualty Insurers Association of America (PCI). 

Hurricanes drive losses in 2017

In the first nine months of 2017, earned premiums grew 3.6% to $404.9 billion, while loss and loss adjustment expenses (LLAE) rose 11.3% to $311.6 billion. LLAE growth in 2017 was driven by catastrophe losses, as Hurricanes Harvey, Irma, and Maria struck the U.S. in the third quarter, and that was after already above-average catastrophes for the first six months of 2017.

Net underwriting losses jumped to $20.9 billion in nine-months 2017 from $1.7 billion a year earlier. While estimates of the insured losses from the three hurricanes are not finalized, ISO estimates that private U.S. insurers' net underwriting losses from catastrophes as reflected in their statutory statements for nine-months 2017 were between $36 billion and $40 billion. 

Industry surplus continues to grow

Insurers' net investment income grew to $35.4 billion in nine-months 2017 from $33.2 billion a year earlier, and insurers' realized capital gains increased to $13.4 billion from $5.6 billion, resulting in $48.8 billion in net investment gains for nine-months 2017, a $10 billion increase from $38.8 billion for nine-months 2016.

The industry's surplus continued to grow, reaching a new all-time-high value of $719.4 billion as of Sept. 30, 2017, after $717 billion as of June 30, 2017, and $700.8 billion as of Dec. 31, 2016. 

Key Q3 results

 

  • Underwriting losses for third-quarter 2017 were $16.4 billion compared with $0.2 billion in third-quarter 2016. 
  • Third-quarter 2017 net losses on underwriting amounted to 11.8% of the $139.1 billion in premiums earned during the period.
  • Net written premiums rose $5.8 billion, or 4.2%, to $145 billion.
  • Net earned premiums grew 4.1% to $139.1 billion.

Related: U.S. commercial insurance prices stay nearly flat during Q3

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