A.M. Best Special Report: Mixed Results for Property/Casualty Segment During the First Quarter of 2015
The Best’s Special Report, titled, “Mixed Results for Property/Casualty Segment During the First Quarter of 2015,” states growth in net premiums written (NPW) was driven by an increase in direct premiums and a decrease in ceded premiums. The decline in ceded premiums reflects, in part, the continuing effect of exceedingly soft conditions in the reinsurance market on primary carriers. Net premiums earned (NPE) also increased in the quarter, although at a lower rate than NPW.
Incurred losses, loss adjustment expenses and underwriting expenses all increased at a slower pace than NPE and NPW, driving the improvement in underwriting results for the quarter, which reflected in a combined ratio of 96.0. Catastrophe losses declined by 6% and favorable development of prior years’ loss reserves increased by 14% compared to the first quarter of 2014, which slowed growth in incurred losses.
Direct premiums written (DPW) for the industry grew by 3.9% in the first quarter of 2015, with the three largest lines—private passenger auto liability, auto physical damage and homeowners/farmowners multi-peril—all showing continued solid growth. The strongest growth rate was in the commercial auto liability line, which saw profitability challenged in 2013 and 2014 by increased claim severity.
As a result of improved underwriting and investment incomes, the industry’s pre-tax operating income increased by 12.9% over the first quarter of 2014 to
Although the personal lines segment remains competitive, it continues to exhibit strengthening capitalization and generally positive operating performance. In addition, the industry continues to take actions to bolster and increase enterprise risk management practices and tighten underwriting standards, many of which have benefited the personal lines segment.
The commercial lines segment recorded a 3.9% increase in DPW through
To access a copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=239634.
Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
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