US INDUSTRY’S NINE-MONTH UNDERWRITING INCOME DROPS 86%

The US property/casualty industry’s underwriting income for the first nine months of the year fell 86%, reflecting increases in underwriting expenses and dividends paid to policyholders, according to a report by AM Best. Underwriting expenses for the period rose 4.4% as some companies recorded pandemic-related policyholder credits as an underwriting expense rather than a decrease in premiums. Dividends paid to policyholders grew by $3.2bn, as other companies paid out those pandemic-related credits in the form of dividends. On top of those expenses, underwriting income was hurt by a 2.3% increase in incurred losses and loss adjustment expenses. The sector’s combined ratio for the period added 0.7 points to 98.7%, with catastrophes’ share rising to 8.3 points from 4.4 points. The decrease in underwriting income, combined with lower investment income, led to a 17.1% decrease in pre-tax operating income. Net income for the nine months fell 25% to $35.5bn as a $4.4bn decline in realised gains added to the decline in operating income.