Cat losses to hit insurer profits in second half of 2021: Fitch

U.S. property/casualty insurers will see profits slow in the second half of 2021 as Hurricane Ida-related losses and other natural catastrophes dent results, Fitch Ratings Inc. said Thursday.

Statutory earnings for U.S. property/casualty insurers “materially improved” in the first half of the year as underwriting performance benefited from higher commercial lines pricing, diminishing effects of pandemic-related losses and outsized investment gains, Fitch said.

The industry is positioned for full-year results that exceed 2020 earnings, but further profit expansion will be “tempered by recent natural catastrophe events, including losses related to Hurricane Ida,” the New York-based rating agency said.

Most commercial lines segments have benefited from “sharp renewal rate increases” over the past two years, Fitch said.

While the pace of price changes is moderating, near-term earned premium growth will fuel further loss ratio improvement in commercial lines through 2022, the note said. Favorable prior underwriting period loss reserve development will also continue to boost overall results.

For the six months ended June 30, property/casualty industry net earnings increased by 56% versus the prior year to $38 billion. Net written premiums increased by 7% year on year, with “very strong growth” in commercial liability segments, Fitch said. The underwriting combined ratio showed “modest improvement” to 97.1%.

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