Press Release - FEBRUARY 27, 2019

Best’s Market Segment Report: U.S. Property/Casualty Insurance Industry Set to Post Third Straight Underwriting Loss for 2018

 Jennifer Marshall
+1 908 439 2200, ext. 5327

John Andre
Managing Director
+1 908 439 2200, ext. 5619
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


AM Best expects the U.S. property/casualty (P/C) industry to mark 2018 as a third consecutive year with an underwriting loss, due primarily to catastrophe losses that included a pair of major fourth-quarter events. While these 2018 losses declined by more than half from 2017, they remained elevated over historic averages, according to AM Best’s 2019 Review/Preview market segment report on the P/C industry.

The Best’s Market Segment Report, titled, “U.S. Property/Casualty 2019 Review & Preview,” projects an estimated net underwriting loss of $12.1 billion in 2018, which follows a $25.3 billion loss in 2017. The P/C industry’s combined ratio is estimated at 101.5 for 2018, with U.S. catastrophe losses generating 6.2 points toward that figure. For 2019, AM Best projects the combined ratio to improve slightly to 101.2, based on the expectation of more normalized losses.

However, given this lower underwriting loss last year and modestly higher net investment income, AM Best expects that the PC industry’s pre-tax operating income will rebound to nearly $43 billion for 2018, more than doubling the prior-year level of $18.7 billion.

Due to lower realized capital gains and unrealized losses on the industry’s equity holdings, AM Best anticipates a modest decline in equity of $3.6 billion to $768.1 billion, a drop of just 0.5%. A slight rebound is projected for 2019, with a small decline in the underwriting loss and modestly higher net investment income.

Equity market declines in the fourth quarter of 2018 are expected to negatively affect the industry’s holdings of common and preferred stocks, with the overall level anticipated to decline for the first time since 2015. However, AM Best does not anticipate the P/C industry’s overall investment mix to change substantially in 2019.

The report notes that net premiums written jumped an estimated 8% in 2018, primarily as a result of U.S. tax reform, enacted in December 2017. Many companies that previously had ceded premiums to offshore affiliates substantially changed those arrangements in 2018 to reduce or eliminate the effect of the Base Erosion and Anti-Abuse Tax included in the Tax Cuts and Jobs Act. The growth in the commercial and reinsurance segments was particularly impacted by these changes.

The market segment report also details AM Best’s expectations for the diverse lines of business that comprise the P/C industry along with the rating agency’s market segment outlooks for these segments. Overall, AM Best expects the P/C industry to remain robustly capitalized, loss costs to remain relatively benign given no immediate signs of spiking interest rates or inflation and catastrophe losses to be more in line with long-term historic averages.

To access a copy of this market segment report, which includes outlooks for the major individual P/C lines of business, please visit .

To view a video interview with Senior Director John Andre on this report, please visit .

AM Best is a global rating agency and information provider with a unique focus on the insurance industry.