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Best investment gains in years aided property/casualty insurers in third quarter of 2015

Posted On: Feb. 9, 2016 12:00 AM CST

U.S. property/casualty insurers saw double-digit profitability in the third quarter and first nine months of 2015, according to a new report from Verisk Analytics Inc.'s Insurance Services Office Inc. and the Property Casualty Insurers Association of America.

Property/casualty insurers also benefitted from the largest net investment gains since 2007 and saw their 22nd consecutive quarter of growth in written premiums, according to the report, “Property/Casualty Insurance Results: Nine-Months 2015,” released Feb. 4.

Nine-month net investment income inched up 0.9% to $34.80 billion, and realized capital gains increased 1.1% to $8.90 billion, totaling $43.70 billion in net investment gains for the first nine-months of 2015, the highest nine-month figure since 2007, when net investment gains totaled $47.8 billion, according to the report.

Insurers' net income after taxes jumped 16.4% in the first nine months of 2015 to $44.00 billion, according to the report.

Net written premiums increased 4.1% to $392.70 billion during the first nine months of 2015.

Overall profitability as measured by annualized rate of return on average policyholders' surplus grew to 8.8% in the first nine months of 2015 from 7.6% in the year-ago period.

The insurers' combined ratio improved to 96.9% for the nine months from 97.7% during the year-ago period, according to the report, as direct insured property losses from catastrophes striking the United States totaled $13.00 billion, down 12.2% from the year-ago period.

The industry's combined ratio for the third quarter, however, worsened to 95.7% from 95.5% in the year-ago period as direct insured losses from catastrophes striking the United States rose 9.1% to $2.40 billion.

Net income rose 11.8% to $13.1 billion in third-quarter 2015 for U.S. property/casualty insurers, according the report.

The insurers' net written premiums rose 4.1%, to $136 billion in third-quarter 2015, according to the report.

Property/casualty insurers' annualized rate of return on average surplus increased to 7.8% in third-quarter 2015 from 7.0% in the same period last year.

“Insurers overall had another strong quarter. Surplus and premium to surplus continue to hover near historic levels,” Robert Gordon, PCI's senior vice president for policy development and research, said in the statement.