U.S. economic activity rose somewhat in 2017 compared to 2016. Real GDP grew by 2.3 percent in 2017 vs. 1.5 percent in 2016—but, because of an unusually costly catastrophe year, the property/casualty (P/C) insurance industry’s $36.1 billion profit for 2017 was 15.8 percent lower than the $42.9 billion profit for the full year 2016.

For the first three quarters of 2017, the property/casualty industry’s financial results were profitable, but bore the effects of sharply higher catastrophe claims, compared to the comparable period for 2016.

Highlights

From an underwriting profitability perspective, 2017 will likely turn out to be a tough year. The first half of 2017 produced a $4.5 billion underwriting loss. Although some of this is attributable to 2017:Q1 results, the second quarter of 2017 also produced an underwriting loss. And thanks mainly to Hurricanes Harvey and Irma, the third quarter will likely deliver a third straight quarter of underwriting losses, making it especially hard to end the year with an underwriting profit.

For the property/casualty (P/C) insurance industry in the first quarter of 2017, the financial weather report (compared with 2016:Q1 and 2015:Q1) was cloudy with occasional bright spots. The clouds: higher CAT claims leading to a deteriorating combined ratio; and continued drop-off in investment yield resulting in a profit slump. The bright spots: stronger net written premium growth; and continued growth in policyholder’s surplus.

U.S. economic activity slowed somewhat in 2016 compared to 2015—real GDP rose by 1.6 percent in 2016 vs. 2.6 percent in 2015—and the property/casualty (P/C) insurance industry’s results followed suit. The industry’s $42.6 billion profit for the full year 2016 was 25 percent lower than the $56.8 billion profit for 2015.

The property/casualty industry’s financial results for the first three quarters of 2016 were by most measures less successful when compared to the comparable period for 2015.

For three years in a row, quarter after quarter, property/casualty insurers produced an underwriting profit. The streak continued in the first quarter of 2016, but appears to have ended in the second quarter.

The property/ casualty insurance industry was profitable and growing in the first quarter of 2016.