US P&C industry suffers $26.5B underwriting loss in 2022

The industry took significant hits from personal lines losses and the impact of Hurricane Ian, as combined ratio deteriorated from 99.7% in 2021 to 102.7% in 2022.

Despite an 8.4% growth in net earned premiums and a 21.4% decline in policyholder dividends, the industry saw a 13.9% increase in incurred losses and loss adjustment expenses (LAE), as well as a 6.2% hike in other underwriting expenses.

Additionally, net income slid 31.3% to $42 billion, with tax expenses down 35.2% and realized capital gains down 83.2%. The industry’s surplus also declined 6.7% to $951.9 billion from the end of 2021.

Data featured in the report was drawn from companies’ annual statutory statements received as of March 9 this year, AM Best said in a press release, representing an estimated 96% of the total P&C industry’s net premiums written.

In another report on the US P&C industry, AM Best revealed that insurers experienced fewer credit rating upgrades and more downgrades in 2022 amid higher reinsurance costs, economic and social inflation, and rising loss costs.

The number of upgrades declined from 54 in 2021 to 36 in 2022, representing 5.1% of total rating actions, while the number of downgrades increased from 3.4% to 4.2%. Personal lines had 10 upgrades and 18 downgrades, while the commercial lines saw 26 upgrades and 11 downgrades.

“Market trends are likely to continue impacting US personal lines insurers negatively,” said Helen Andersen, an industry analyst with AM Best. “The commercial segment also faces headwinds but remains solidly capitalized owing to its conservative investment profile, sound reserve position, and enhanced risk management discipline.”

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