The U.S. domestic professional and domestic specialty surplus lines’ 2012 underwriting performance fell below P&C’s performance for the first time in more than a decade, according to A.M. Best.
The ratings agency’s recent report, "Special Report: U.S. Surplus Lines - Segment Review. Surplus Lines Results Stumble Amid Sandy Losses, but Premium Growth Continues" points to Superstorm Sandy as a large factor in the sector’s worst years overall in recent memory. The latest estimates place insured losses from the Oct. 29, 2012 catastrophe near $25 billion, and it’s unclear how much of this insured loss the surplus lines market will absorb. The sector's fourth-quarter loss ratio surged nearly 12 points, to 64.8 from 52.9, indicating that surplus lines were not spared.
A.M. Best Co.’s domestic professional surplus lines peer composite experienced a downturn in profitability in 2012, causing pretax operating income to decline 24.3 percent and net income to drop 10.2 percent. Net income, however, was still sizable at $1.57 billion, compared with $1.75 billion in 2011.
