OLDWICK, N.J.--(BUSINESS WIRE)--The U.S. property/casualty industry posted a first-quarter 2017 net underwriting loss of $841.5 million, according to preliminary financial results, continuing the industry’s underwriting loss trend seen in 2016. The first-quarter loss was significantly less than the $2.0 billion net underwriting profit reported in first-quarter 2016, and was the only first-quarter underwriting loss reported in the last five years. This financial review is detailed in a new Best’s Special Report, titled, “A.M. Best First Look—1Qtr 2017 U.S. Property/Casualty Financial Results,” and the data is derived from companies’ three-month 2017 interim statutory statements that were received as of May 17, 2017, representing an estimated 96% of the total property/casualty industry’s net premiums written.
According to the report, net investment income grew 9.5% to $11.9 billion during first quarter 2017; however, nearly half of that was offset by a $5.9 billion loss in other income, reflecting the impact of a retroactive reinsurance contract entered into in February 2017 by American International Group, Inc. (AIG) and National Indemnity Company.
Net income fell to $7.3 billion in first-quarter 2017, a 45.2% decline in net income from the prior-year period. Despite the significant decline, partly due to the AIG reinsurance contract, industry surplus reached a record $696.9 billion at the end of March 2017, driven by an $8.5 billion increase in unrealized gains, an increase in other surplus gains and a reduction in stockholder dividends.
A.M. Best estimates the property/casualty industry’s three-month 2017 combined ratio deteriorated to 99.7, compared with 97.7 in the same prior-year period. Estimated catastrophe losses of $7.6 billion, up 48% from the first-quarter 2016, accounted for 6.0 points on the combined ratio, 1.8 catastrophe points higher than what was seen in first-quarter 2016.
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