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US property/casualty sector sees $20 billion 9-month underwriting loss

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The U.S. property/casualty industry posted a preliminary net underwriting loss of $20 billion for the first nine months of the year, insurance ratings firm A.M. Best Co. Inc. said Tuesday, dwarfing a $2.3 billion loss in the same period a year ago.

A report by the Oldwick, New Jersey-based company noted that catastrophes so far this year are the main driver of year-to-date 2017 results, overshadowing underlying industry fundamentals.

Best estimates U.S. property/casualty nine-month 2017 catastrophe losses will total $38.4 billion, up 89.1% from the same period in 2016 and eclipsing the full-year 2012 catastrophe loss estimate of $36.1 billion, which included Superstorm Sandy and was the previous high.

Best also estimates that the catastrophe losses account for 9.8 points on the property/casualty combined ratio combined ratio, which deteriorated 4.3 points from the prior-year period to 104%, marking the worst first nine-month period of the past five years.

The data is derived from companies’ nine-month 2017 interim statutory statements received as of Nov. 16, representing an estimated 95% of the total property-casualty industry’s net premiums written.

Income for the industry dropped 25.5% compared with the prior-year period to $22.9 billion.

However, Best said, despite the decline in net income, industry surplus grew to $699.8 billion at the end of September, driven by an $11.2 billion increase in unrealized gains, a slight increase in other surplus gains and a 20% reduction in stockholder dividends.