For the first time since 2007, the U.S. property/casualty industry has been profitable through June 30. Overall, the industry posted a calendar-year combined ratio of 96.5 at midyear, representing a 4.5-point improvement from the 101.0 reported through the first half?of 2012.

A.M. Best attributes the first-six-month underwriting profit to a combination of continued improvements in the pricing environment, a boost to exposures from the slowly improving economy and underwriting actions taken to insulate balance sheets against further impact from the challenging investment environment.

According to the rating agency’s recent report, “U.S. P/C Industry Continues to Strengthen; PHS Reaches Record Level,” the personal lines segment continued to show earnings improvement through the first six months of 2013, compared with the first six months of 2012, primarily due to a doubling of realized capital gains and a 52.4 percent increase in pretax operating income. The top five personal lines insurers ranked by six-month 2013 gross premiums written are State Farm, Farmers Insurance, Allstate, Nationwide and Progressive.

Ongoing improvement in pricing has sustained growth in premium volume for commercial lines, as shown in results reported through June 30, 2013. Growth in NPW continues to accelerate for the segment, up 4.6 percent to about $100.4 billion from approximately $96 billion during the same prior-year period. The top five commercial lines insurers ranked by six-month 2013 gross premiums written are Liberty Mutual, Travelers, AIG, Hartford and ACE.

The reinsurance industry produced a solid underwriting gain of $1.9 billion. This was an increase over the same period in 2012, which only produced a gain of about $1 billion.

The top five reinsurers ranked by six-month 2013 gross premiums written are National Indemnity, Swiss Re, Munich Re, Everest Re and XL Re.

Other profitability measures for the entire group also improved, with after-tax return on surplus increasing to 5.6 percent from the 3.6 percent return for the first six months of 2012, A.M. Best said.

With U.S. catastrophe losses below their 2012 levels and investment income beginning to stabilize, pretax operating income increased by nearly 40 percent compared with 2012. Net income, boosted by strong realized gains through June 30, grew by more than 65 percent from the first half of 2012. Increasing 7.4 percent from June 30, 2012, the industry’s policyholders’ surplus (PHS) rose to $627 billion, boosted by the favorable income trends and a $20 billion swing in the industry¹s unrealized capital gains.


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