The excess and surplus lines market is expected to generate an underwriting profit this year and next, with hard pricing in most product segments keeping pace with loss costs, Fitch Ratings said in a report issued Wednesday.
Recent growth is attributable to admitted markets shedding business falling outside of their risk appetite that is moving to the E&S market, the report says.
The sector’s direct statutory premiums written reached $91 billion in 2022, approaching 9% of total property/casualty industry premium, compared with a historical average of about 5% before a growth spurt that started in earnest in 2018, according to the report.
The sector had about a 96% combined ratio in 2022, compared with essentially break-even results in 2021, with better underwriting results relative to the overall property/casualty industry for the first time since 2015.
According to the report, E&S premium is roughly split between two-thirds casualty and one-third property. There is little workers compensation nonadmitted casualty exposure, which is the largest casualty line in the admitted space.
Oldwick, New Jersey-based A.M. Best reported last month that total annual surplus lines market premiums increased 19.2% to $98.5 billion in 2022.
