U.S. P/C Insurers See Profits in 2020 Despite COVID-19 Fallout

Despite considerable operating challenges in 2020 from the global COVID-19 pandemic, U.S. property/casualty (P/C) insurers saw a statutory underwriting profit for the third consecutive year, according to Fitch Ratings in a new report.

Source: Fitch Ratings | Published on April 13, 2021

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Apart from the tumultuous fallout of the pandemic, P/C insurers faced a deluge of catastrophic events including several hurricane landfalls, California wildfires, a Midwest derecho and civil unrest related claims that added substantially to the 2020 industry loss ratio. Industry policyholder surplus dropped sharply in 1Q’20 from equity market turmoil. However, asset markets rebounded and operating earnings materialized resulting in a record surplus increase to $914 billion at year-end.

Fitch expects new claims related to the coronavirus pandemic to gradually subside in 2021. "Industry underwriting performance is anticipated to improve in 2021, largely due to sharp premium rate increases in commercial lines," said Managing Director James Auden. Still, uncertainty will remain regarding sufficiency of incurred loss estimates related to pandemic-related commercial insurance claims in business interruption and several liability segments that may require lengthy litigation to resolve.

"U.S. Property/Casualty Market Update: Results Stable Despite 2020 Challenges, Hardening Market Boosts Profit Opportunity" is available at ‘www.fitchratings.com’.