Personal lines resulted in the US industry experiencing its first and biggest Q1 net loss in over a decade.
Low personal lines have caused the US property and casualty insurance industry to experience the largest underwriting loss on record and its first in 12 years, according to a new data analysis of statutory financial statements by S&P Global market Intelligence.
The analysis was a preliminary calculation based on the underwriting losses of P&C insurers.
According to S&P Global Market Intelligence’s preliminary calculations, property and casualty insurers in the United States experience combined ratio of 102.2 percent on a $7.34 billion net underwriting loss in Q1. In comparison, the same quarter a year ago saw a 96.1 percent combined ratio on a $4.27 billion net underwriting profit for the same insurers.
The first quarter combined ratios for the first quarter were equal to or higher in 2001, 2002, 2009 and 2011, having hit a peak in the first quarter of 2001 at 106.0 percent. At the same time, 2001 through 2022 saw the largest net underwriting loss in a first quarter in Q1 2001 (adjusted for inflation) at $5.63 billion.
The property and casualty industry tends to see its highest profitability in the fourth quarter of a year.
The reason P&C insurers tend to see their highest profitability in Q4s is that the second and third quarters have a tendency to be most greatly impacted by severe storms and hurricanes. That said, inflation-related issues and particularly active natural catastrophe periods have combined in the private auto business to result in the highest ever personal lines direct incurred loss ratios in a Q1 at 74.8 percent. The previous high loss for a Q1 between 2001 and 2022 had been 2001’s 70.2 percent.
Across the last 88 quarters for which there was data available, including all four quarters of each calendar year, there were only seven instances in which the personal lines direct incurred loss ratio was greater than 74.8 percent. Of those, three occurred within the last seven quarters, illustrating similar underlying business challenges that resulted in the extremes of this year’s first quarter for property and casualty insurance.