P/C Net Income Drops 42.2 Percent in Q1

The private U.S. property/casualty insurance industry saw its net income after taxes drop to $7.7 billion in first-quarter 2017 from $13.4 billion in first-quarter 2016—a 42.2 percent decline—and its overall profitability, as measured by its annualized rate of return on average policyholders’ surplus, fall to 4.4 percent from 7.9 percent, according to ISO, a Verisk Analytics (Nasdaq:VRSK) business, and the Property Casualty Insurers Association of America (PCI).

The industry experienced $7.3 billion in direct catastrophe losses—the highest first-quarter catastrophe losses since the 1994 Northridge earthquake—and $2.3 billion above the direct catastrophe losses for first-quarter 2016. Insurers’ combined ratio deteriorated to 99.6 percent for first-quarter 2017 from 97.4 percent for first-quarter 2016. Insurers also saw some improvement from a year earlier. Net written premium growth accelerated to 4.0 percent for first-quarter 2017 from 3.2 percent for first-quarter 2016. Net investment gains increased by $1.2 billion to $14.4 billion in first-quarter 2017, from $13.2 billion for first-quarter 2016. The industry’s surplus reached a new all-time high value of $709 billion as of March 31, 2017, increasing $8.1 billion from $700.9 billion as of December 31, 2016.