P&C Q3 combined ratio deteriorates: S&P Global

The combined ratio for the U.S. property and casualty insurance industry in the third quarter deteriorated to around 106.6% from 103.7% in the second quarter – its highest level since 2017, Standard & Poor’s Global Market Intelligence said on Tuesday. a report.

The deterioration in the industry’s primary measure of profitability came as personal insurers bore the brunt of the losses from Hurricane Ian and inflationary pressures.

At $15 billion, the sector’s net underwriting loss also hit a 20-quarter high, according to S&P Global’s preliminary estimate.

However, continued strong growth in premiums written and earned and favorable calendar year results in workers’ compensation helped mitigate the magnitude of the loss, S&P Global said in its analysis.

Catastrophe losses in the quarter hit various property lines, including physical damage coverage to private cars, while high vehicle repair and replacement costs and longer than usual times to close auto insurance claims continued to weigh on the industry, he said.

The private motor line generated a direct loss ratio of 84.7% in the quarter, including 80.7% in private motor third party liability and a staggering 90.4% in private motor physical damage, according to the report.

According to S&P Global analysis, loss ratios also increased during the quarter in the proprietary, commercial property and fire and related lines due to Ian, as well as building materials and labor costs. higher.

At the other extreme, the direct calendar year claims ratio in workers’ compensation fell to a meager 43.6% from 45.8% in the second quarter. Direct losses incurred in compensation declined during a period of rapid premium growth as employer payrolls ballooned.

The data reinforces the urgency insurers have already shown around rate increases on private auto business, S&P Global said.

“It also speaks to the considerable volatility that catastrophe-related losses continue to inject into quarterly earnings, even after factoring in significant hurricane reinsurance coverage,” he said.

According to the report, net underwriting losses in the quarter often resulted in lower net losses or net income levels for individual P&C insurers.

Downward pressures on fixed income and equity valuations also led to broad-based net negative changes in unrealized gains and losses for the third consecutive period.

Some 51% of individual entities for which September 30 data is available showed a decline in policyholder surplus from June 30 levels, according to the report.

Sallie R. Loera