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AM Best: P&C industry swings to underwriting loss in first nine months of 2021

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The US P&C industry recorded a $6.07bn net underwriting loss through the first nine months of 2021, reversing a $5.62bn underwriting gain in 2020, as catastrophe losses mounted, AM Best said.

The ratings agency reached that figure after compiling the results from all companies that reported results through September prior to Wednesday. AM Best said these companies account for roughly 97% of total industry net premiums written.

The combined ratio for the industry weakened to 99.5% from 98.8% in the first nine months of 2020. AM Best estimated that catastrophe losses accounted for 8.2 points on the nine-month 2021 combined ratio, down from 8.4 points in the 2020 period.

Wildfires, flooding and Hurricane Ida all contributed to a difficult catastrophe quarter for the industry. Hurricane Ida losses alone could total $44bn, according to modeling agency RMS.

Excluding $6.3bn of favorable reserve development in the nine-month period, down from $8bn last year, the accident year combined ratio for the industry was 100.7%, edging up from 100.5% last year.

Net written premiums rose 10.8% to $535.4bn in the first nine months of 2020, and net earned premiums rose 8.2% to $501.7bn. A 53.4% decline in policyholder dividends was offset by a 12.1% increase in incurred losses and loss adjustment expense, and a 5.9% increase in underwriting expense, AM Best said.

Industry net income increased 21% to $42.4bn, thanks to a 7.8% increase in net investment income and a $9.7bn increase in realized capital gains.

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