OLDWICK, N.J.--(BUSINESS WIRE)--Through the first nine months of 2014, the U.S. property/casualty (P/C) industry’s underwriting performance continues to lag behind 2013 but remains favorable, and as a result, policyholders’ surplus continues to reach new record levels, according to a new A.M. Best special report.
The Best’s Special Report, titled “U.S. P/C Industry Posts Underwriting Gains, Record Policyholders’ Surplus,” states that the pure loss ratio increased by 2.0 points to 58.2 for the nine months through Sept. 30, 2014, primarily as a result of higher catastrophe losses and reduced benefit from favorable development of prior accident years’ loss reserves. While net premiums written (NPW) grew – to $381.4 billion from $364.5 billion year over year – the pace of that growth has slowed. However, increased NPW benefited the underwriting expense ratio, as those expenses climbed at a slower pace than NPW.
Policyholders’ surplus (PHS) increased to $676.2 billion at Sept. 30, 2014, a $13.0 billion increase from its prior year-end level and a 7.7% increase from the same point in 2013. However, lower underwriting and investment returns had a negative impact on return on equity, which declined to 5.6% from 7.8% in 2013.
Catastrophe losses totaled $17.5 billion in the first three quarters of 2014, a 25.2% increase from their 2013 level of $14.0 billion. The higher catastrophe losses added 0.8 points to the nine-month combined ratio of 97.9; however, the industry did post a seventh consecutive quarter of underwriting profit, at $2.9 billion.
To access a copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=231864.
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