US P&C chases personal line losses, cut underwriting loss 15% in ‘23
US P&C insurers suffered a $21.2 billion net underwriting loss in 2023 after policyholder dividend, a 15% cut from the prior year loss as carriers held the line on expense to tip the scales on a year in which carriers could only press for more premium in loss-stricken personal lines.
“Losses in the personal lines segment, specifically the homeowners' line of business, were primarily responsible for the weak underwriting results,” analysts at AM Best said of a technical loss with 101.6% combined ratio.
Net earned premiums rose by $72 billion or 9.9% to nearly $803 billion, after a 12.4% rise in net written premium in a year dominated by gains for personal lines. Personal auto physical damage NWP premium rose 18.5% to account for 26% of the overall increase in NEP; personal auto liability rose 11.9% to account for 23% of the total gain. Homeowners’ multi-peril rose 12.2%to account for 17% of the total nationwide premium gain.
In commercial lines, only non-liability commercial multi-peril managed NWP managed double-digit growth at 15.9% to account for nearly 6% of the aggregate nominal NWP gain. Commercial auto held premium growth to 7.7% for liability and 8.4% for physical damage. Multi-peril commercial liability rose 6.7%.
In specialty lines, ocean marine tops at 13.6% growth, a similar gain for surety, followed by mid-single digit gains for inland marine, medical professional liability, product liability and aviation. NWP in workers comp rose a fractional 0.9%.
The total $72 billion gain in premium was more than enough to overcome a $55 billion or a 10% rise in loss and loss adjustment cost including reduced PYD, which kept the overall loss ratio roughly flat at 76.3%, and the $12.5 billion or 6.4% increase in underwriting expense that took the decisive 0.9 points off the expense ratio to 24.9%.
The 10% rise in claims likely included an increase in the catastrophe component. AM Best estimates that cat losses accounted for 8.7 points of the 2023 loss ratio, up from an estimated 7.3 points in the year prior, “driven by record severe convective storm losses”.
With earned net investment income largely flat y/y at $71.3 billion, pre-tax operating income rose 4.8% to $50 billion.
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