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U.S. property/casualty net underwriting income plunges 86%

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The U.S. property/casualty industry’s net underwriting income fell 86% in the first nine months of 2020, compared with the year-earlier period, to $600 million, as insurers reported COVID-19-related increases in underwriting expenses and dividends to policyholders, according to an A.M. Best report released Monday.

The report by Oldwick, New Jersey-based A.M. Best is based on nine-month 2020 interim period statutory statements received as of Nov. 18, and account for 97% of total industry net premiums written and 96% of policyholder surplus.

The report said the reduction in insured exposures resulting from stay-at-home orders and government-ordered business closures in response to the pandemic led some proper/casualty insurers to provide premium credits, while refunds and policyholder dividends increased as required under existing policy terms.  Voluntary premium refunds may be reported as an underwriting expense if certain conditions are met, according to the report.

The nine-month 2020 combined industry ratio was 98.7%, compared with 98% for the comparable period last year.

A.M. Best estimates catastrophe losses accounted for 8.3 points of the combined ratio, compared with an estimated 4.4 points for the comparable period in 2019.