The US property/casualty (P/C) insurance industry recorded a $4.1 billion net underwriting gain in the first nine months of 2024, a notable improvement from the $32.1 billion loss reported during the same period in 2023, according to a report from AM Best.
The report offers an early look into the financial performance of the industry based on interim statutory statements received as of Nov. 25, 2024, representing approximately 98% of total industry net premiums written and 96% of policyholder surplus.
The underwriting gain was driven by a 9.5% increase in net earned premiums, which helped offset a 1.3% rise in incurred losses and loss adjustment expenses (LAE) and a 9.2% increase in other underwriting expenses. AM Best highlighted the continued improvement in the personal lines segment as a key factor in the better underwriting results.
The industry’s combined ratio improved to 97.9 during the nine-month period, down from 100 in the prior year. According to the report, catastrophe losses accounted for 8.8 points of the combined ratio, a decrease from 10.0 points in 2023. When excluding $8.5 billion in favorable reserve development, the accident-year combined ratio stood at 99.2.
In addition to underwriting improvements, the P/C industry benefited from a 22.1% increase in earned net investment income. This contributed to a 261.7% rise in pre-tax operating income, reaching $65.9 billion.
A $21.2 billion change in net realized capital gains at three Berkshire Hathaway Insurance Group companies also supported the industry’s profitability, with net income doubling to $130 billion compared to the same period in 2023.
Policyholder surplus rose to $1.1 trillion at the end of September 2024, driven by a combined $131.4 billion from net income and contributed capital. This increase was partially offset by an $11.6 billion change in unrealized losses, $1.4 billion in other surplus losses, and $15.4 billion in stockholder dividends.
Stockholder dividends dropped by 83.9% compared to the prior year due to an $82 billion distribution recorded in 2023 by National Indemnity Company as part of a dividend to its parent company.
The industry’s ability to manage catastrophe losses and capitalize on favorable market conditions contributed to its stronger financial position, AM Best says. However, ongoing challenges in underwriting expenses and external market pressures may continue to shape future performance.
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