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Second consecutive year of losses in underwriting for u.s. insurers

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February 12, 2018 09:45

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After having experienced a loss modest subscription in 2016, the property and casualty insurers, americans will see an increase in their balance sheets to 2017, indicates an analysis of the firm’s rating A.M. Best.

The report stresses that the hurricanes and the forest fires have been largely responsible for this loss, especially during the third and fourth quarters. Moreover, the competitive rates in the majority of segments of business insurance, despite the recognition of the need for an increase in the end of the year.

Increase of the combined ratio in view

The firm expects a combined ratio of 105.1 % for 2017, an increase from 2016, when the rate was of with 100.9 %, and a return to 100 % in 2018. In contrast, A.M. Best believes that premiums will increase by 4.1% by 2017 and 3.5% in 2018, compared to an increase of 2.8% in 2016.

«The increase in disaster losses to a level surpassing the historical average had an overall effect on the industry, though a strong capitalization has allowed the majority of primary insurers and reinsurers to respond to the risks, despite a decrease in their operating income and their net profits,» says A.M. Best.

A positive side

The analysis points out that the rise in disaster losses has a good side, since this has led to a higher competition rate in some sectors. Several veterans of the market consensus was that rates in many areas had dropped to levels that were not sustainable, because profits were driven by strong performance of the market, when the disaster losses remained low.

A.M. Best also expects that the industry generates positive income in 2017 and 2018, thanks to investment income.

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