U.S. property and casualty insurers’ net income up US$5 billion in the first half of 2015 from same time last year: ISO

Private U.S. property & casualty insurers’ net income after taxes grew to US$31 billion in the first half of 2015 from US$26 billion in the first half of 2014, with insurers’ overall profitability as measured by their rate of return on average policyholders’ surplus growing to 9.2% from 7.8%, according to a report from ISO and the Property Casualty Insurers Association of America (PCI).

ISO, a Verisk Analytics business, said in a statement on Wednesday that insurers’ combined ratio improved to 97.6% in first-half 2015 from 98.9% in first-half 2014. Net written premium growth remained unchanged at 4.1% for the first halves of 2014 and 2015. Net investment income increased to US$23.4 billion in the first half of 2015 from US$23.0 billion a year earlier, and realized capital gains increased to US$8.2 billion from US$7.2 billion, resulting in US$31.6 billion in net investment gains for first-half 2015, the statement said. [click image below to enlarge]

“While Old Man Winter did his best to disrupt things in the Northeast, during the first half of 2015, insurers overall incurred lower domestic catastrophe losses than they did during the first half of last year due to a relatively quiet tornado season and the slow start to hurricane season,” said Robert Gordon, PCI’s senior vice president for policy development and research. “Insurers’ combined ratio and rate of return all improved in the first half of 2015, while premium growth and investment income remained relatively stable.”

Beth Fitzgerald, president of ISO Solutions, said in the statement that it’s important to note that U.S. catastrophe losses during the first half of 2015 were only slightly lower than the ten-year average. “As the devastation caused by meteorological conditions associated with Hurricane Joaquin highlights, it’s crucial for insurers to remain disciplined in their underwriting and look at analytics to be ready not only for weather disasters but also for other major challenges the future may hold,” she said.

Other findings in the report include:

• The property and casualty insurance industry’s consolidated net income after taxes rose to US$12.8 billion in second-quarter 2015, up from US$12.1 billion in second-quarter 2014;

• Net written premiums rose US$5.5 billion, or 4.4%, to US$130.6 billion in second-quarter 2015 from US$125.1 billion in second-quarter 2014;

• The industry’s combined ratio improved to 99.4% in second-quarter 2015 from 100.6% in second-quarter 2014; and

• P&C insurers’ annualized rate of return on average surplus increased to 7.6% in second-quarter 2015 from 7.3% a year earlier.