US P&C carriers slip to H1 underwriting loss on mass run-up in claims

The US P&C industry slipped to a $6.3 billion net underwriting loss in the first six months of 2022 on runaway claims growth well in excess of high single digit premium gains.

Loss and loss adjustment expense rose 15.8% year on year for the industry, a $36.1 billion increase that far exceeded the $30.6 billion or 9.3% rise in net earned premium.

“The personal lines segment, specifically the auto lines of business, were responsible for decline in underwriting results,” analysts said, without offering further claims data by segment.

The run-up in claims costs came on both an increase in accident year loss ratios and less favourable prior period reserve development.

The 3.0 percentage point (pps) rise in the reported combined ratio to 100% came on $2.9 billion in lower prior year adjustments that added one of the points. The rest came on a nearly 2.0 pps increase in the accident year loss ratio.

But that rise in current claims came against a decline in catastrophe impact. AM Best puts the cat losses at 5.4 pps of the 2022 combined ratio, down from 7.0 pps in the prior year period.

H1 investment earnings were skewed by a one-off massive gain at Columbia Insurance Company to help keep the bottom line decline to a mere 18% year on year to $31.4 billion.

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