According to the report, the combined ratio for the P/C industry deteriorated to 96.4 from 95.0 in the first quarter of 2020. Catastrophe losses accounted for an estimated 6.9 points on the three-month 2021 combined ratio, up from an estimated 3.3 points in first-quarter 2020. Despite 2.3% growth in net earned premiums in the quarter, increases in incurred losses, loss adjustment expenses (LAE) and underwriting expenses, as well as a sharp 72% rise in policyholder dividends, drove the underwriting income decline.
With net investment declining slightly, the drop in underwriting income drove a 12.9% reduction in pre-tax operating income. As tax expenses were down 18.4% and realized capital gains were up $4.1 billion, industry net income increased by 11.4% from the same prior-year period to $20.2 billion.
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