US: P&C insurers set for modest improvement in 2024
Source: Middle East Insurance Review | Jan 2024
US property and casualty (P&C) insurers will see some relief in the coming year following a rough 2023 as a personal auto line recovery contributes to statutory profit improvement, according to Fitch Ratings in its 2024 sector outlook report. Projections for the year include continued strong industry premium growth, with improvement moderated by a combined ratio that remains above 100% and a return on surplus of approximately 5% that is still below historical norms.
Fitch’s sector outlook for the US P&C industry remains neutral, said the report. The outlook for the individual commercial and personal lines sectors are neutral as well. Meagre financial results in 2023 reflect larger year over year underwriting losses and lower statutory earnings, driven by poorer personal auto and homeowners’ performance.
“Following two years of large underwriting losses, auto results will show more material improvement as rate increases take hold and claims severity trends moderate, though a return to segment underwriting profits is less likely,” said Fitch Ratings managing director Jim Auden.
“Countering the auto rebound are continued challenges P&C insurers are facing in managing catastrophe exposures and loss-cost uncertainty in many segments amid higher inflation and growing claims litigation activity and costs,” he said.
The commercial lines sector continues to generate underwriting profits. Sector underwriting gains may narrow in 2024 but pricing trends are anticipated to remain largely positive. Property and commercial auto lines remain as segments with greater performance uncertainty.
Nat CAT losses were above prior norms in 2023 despite a respite from large hurricane events due to an elevated number of convective storm events.
“Primary insurers are likely to retain a higher piece of catastrophe losses going forward as recent reinsurance renewal periods led to notable increases in catastrophe reinsurance attachment points for many insurers,” said Mr Auden.