Based on statutory financial statements filed by health insurers, carriers collectively reported underwriting gains
of almost $7.9 billion in the individual segment in 2018; a surprising difference from the $1.7 billion reported in 2017.
Following four consecutive years of strong underwriting gains
in the homeowners' segment, industry underwriting results in homeowners insurance turned sharply unfavorable last year with the combined ratio rising to 107% due to higher catastrophe-related losses.
While the pretax profits were primarily driven by underwriting gains
, investment income also contributed.
The bad news is that rising claims ate up more premium revenue, squeezing underwriting gains
The data on underwriting gains
and losses, investment income, loss ratio, underwriting expense ratio, combined ratio, net premiums written, unearned premium reserves, and loss reserves were gathered from the Best's Aggregates and Averages--Property and Casualty.
INSURERS' OVERALL PROFITABILITY AS MEASURED BYTHEIR RATE OF RETURN ON AVERAGE POLICYHOLDERS' SURPLUS REMAINED VIRTUALLY UNCHANGED AT 8.4 PERCENT, EVEN THOUGH THEIR COMBINED RATIO DETERIORATED TO 97.8 PERCENT FROM 97.0 PERCENT AND THEIR NET UNDERWRITING GAINS
DECLINED TO $8.7 BILLION FROM $12.2 BILLION.
The lower underwriting gains
, though ($3.9 billion in 2015 compared to $4.7 billion in 2014), helped drive down the segment's net income by 7.1%, to $25.6 billion in 2015.
Issuers continued to have a much easier time making money in both the small-group market and the large-group market, but the percentage that generated group health underwriting gains
was smaller in 2014 than in 2013.
In the same period, insurers' overall combined ratio improved to 95.7% in Q1 2015, compared to 97.1% in first quarter of 2014, and net underwriting gains
increased from $2.4 billion to $4.1 billion.
The updated weather-based models, which were released Tuesday, estimate underwriting gains
and losses based on crop yield probabilities in the context of current conditions, notes a statement from AIR Worldwide.
Potential underwriting gains
for the AIPs have also been reduced.