Property/casualty underwriting profits projected for 2016Posted On: Feb. 19, 2016 12:00 AM CST
The property/casualty insurance industry should experience another year of underwriting profit in 2016, according to a report released Friday by A.M. Best Co. Inc.
That would follow projected underwriting profit for 2015, Best said in “Property/Casualty Industry Expected To Produce Third Consecutive Underwriting Profit While Net Income and Surplus Growth Slow.” Best said that the industry's estimated combined ratio for 2015 is expected to deteriorate slightly from that of a year before to 98.0% from 97.4% as rate increases slow and the level of favorable loss reserve development declines, albeit modestly.
“With net investment income also declining, pre-tax operating profit is projected to fall by 2.1%, to $59.9 billion,” Best said. However, net income, while expected to decline in 2015 to $60.1 billion from $63.5 billion, will remain well-above its five-year average.
For 2016, Best said that while factoring in a return to a more historically average level of catastrophe losses combined with the absence of any significant changes in prior years' loss reserves, “further deterioration in the calendar year combined ratio is expected” with the combined ratio deteriorating to 99.2%. “However, a fourth consecutive year of underwriting profitability is anticipated,” Best said.