The U.S. property & casualty insurance industry posted a first-quarter 2017 net underwriting loss of $841.5 million, according to preliminary financial results detailed in A.M. Best’s latest “First Look” report.
The loss compares to a $2 billion net underwriting profit reported in first-quarter 2016, and is the only first-quarter underwriting loss reported in the last five years, according to the report.
According to the report, net investment income grew 9.5 percent to $11.9 billion. However, nearly half of that was offset by a $5.9 billion loss in other income, reflecting the impact of a retroactive reinsurance contract in February 2017 by American International Group (AIG) and National Indemnity Co.
Net income fell to $7.3 billion in first-quarter 2017, a 45.2 percent decline from the prior-year period.
Despite the steep drop in net income – partly due to the AIG reinsurance contract – the insurance industry surplus reached a record $697 billion at the end of March 2017, driven by an $8.5 billion increase in unrealized gains, an increase in other surplus gains and a reduction in stockholder dividends, according to A.M. Best.