RAA results show weakened CR, NWP boost for US P&C reinsurers in last nine months
A survey conducted by the Reinsurance Association of America (RAA) found a that group of 17 US P&C reinsurance carriers wrote $57.3bn in net written premiums during the first nine months of 2021, marking a 16.2% increase from the $49bn booked last year.
The RAA study also found that for the nine months ended September 30, the combined ratio for the group deteriorated by 0.5 points to 100.7%, driven by a 76% loss ratio and 24.1% expense ratio.
Policyholders’ surplus held mostly firm at $257.6bn, edging up just 0.3% from the $256.8bn reported in the prior quarter.
Further, only five out of the 17 companies analyzed posted underwriting profits: AmericanAg, Endurance Assurance, General Re, National Indemnity and XL Re.
Of these five reinsurers who booked gains, Endurance Assurance reported the highest increase in net written premiums, a 27.5% increase over the corresponding period last year. Endurance posted a 93.7% combined ratio, bested only by the 90.5% CR posted by XL Re and the 93.1% CR posted by General Re, RAA data showed.
Property risks have been rising, driven by a heavy cat-loss quarter, featuring hurricanes Ida and Nicholas, while prices in reinsurance have failed to match the exposure in the segment.
For instance, in a recent shareholder letter, Alleghany CEO Hicks said that the P&C carriers had enjoyed several years of relatively low catastrophe losses, leading to a more competitive market in the following years.
However, as cat losses surged amid heightened natural catastrophes and the pandemic, Hicks noted that “while our insurance and reinsurance subsidiaries performed an essential function to society by absorbing these losses, we do not believe that they have done so at prices that allow them to earn a fair rate of return on the capital required to support these risks.”