The property/casualty insurance industry is on track for what will assuredly be its best year in the post-crisis era, after a sharp improvement in profitability in the first nine months of 2013, according to I.I.I. president Dr. Robert Hartwig.
In his commentary on the industryÃ¢â‚¬â„¢s 2013 – First Nine Month Results, Dr. Hartwig notes that the industryÃ¢â‚¬â„¢s strong performance was propelled chiefly by lower catastrophe losses, favorable prior year reserve development and growth in premiums.
The effect: the industry combined ratio fell to 95.8 in the first nine months of 2013 from 100.7 in the first nine months of 2012Ã¢â‚¬”leading to an underwriting profit of $10.5 billionÃ¢â‚¬”much needed in an era of persistent, ultra-low interest rates.
As a result, the industryÃ¢â‚¬â„¢s overall net income after taxes (profits) surged by 54.7 percent through the first three quarters of 2013 to $43.0 billion from $27.8 billion in the year earlier period, pushing the industryÃ¢â‚¬â„¢s return on average surplus up to 9.5 percent, up from 6.5 percent in the first nine months of 2012.
Dr. Hartwig comments:
Looking ahead, there is no question that 2013 fourth-quarter performance for the property/casualty insurance industry will be far superior to 2012. This is because last yearÃ¢â‚¬â„¢s fourth quarter includes the impacts of Hurricane Sandy, which resulted in $18.8 billion in insured catastrophe losses. No event in the fourth quarter of 2013 comes remotely close. In addition, property/casualty insurers will benefit from a strong performance in financial markets during the final quarter of the year.Ã¢â‚¬
This yearÃ¢â‚¬â„¢s nine-month catastrophe losses were far below the 10-year average for the first nine months of $20.0 billion, according to ISOÃ¢â‚¬â„¢s PCS unit. Direct insured losses from catastrophes through the first nine months of 2013 fell by $4.5 billion to $11.7 billion from $16.2 billion in the year earlier period.
Meanwhile, net written premiums were up 4.2 percent during the nine-month period from 4.1 percent for the year earlier reading. This marked the fourteenth consecutive quarter of growth and the longest continuous period of growth in nearly a decade, Dr. Hartwig noted.
The results were released by ISO and the Property Casualty Insurers Association of America (PCIAA).