The U.S. property and casualty insurance industry reported a net underwriting gain of $3.8 billion in the first half of 2024, a significant improvement from the $24 billion loss recorded in the same period in 2023, according to a report from AM Best.

The recovery was driven by an 11.3% increase in net earned premiums, which helped offset a 2.5% increase in incurred losses and loss adjustment expenses and a 24.9% increase in other underwriting expenses.

The improvement in the personal insurance sector was mainly responsible for the turnaround in the industry’s underwriting results. The industry’s combined ratio improved to 97.7 in the first half of 2024.

Catastrophe losses were 7.4 points on the combined ratio, down from 9.7 points during the same period in 2023, which was impacted by record losses from severe convective storms. Without $8 billion in favorable reserve development during the first six months of 2024, the industry’s accident-year combined ratio was 99.4.

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Underwriting gains, coupled with a 26.6% increase in net investment income, contributed to a 374.4% increase in pre-tax operating income to $47.3 billion. The $50 billion increase in net capital gains realized at National Indemnity Company also boosted the industry’s overall performance, leading to a sharp increase in net income from $9.4 billion in the first half of 2023 to $97.6 billion this year.

The industrial surplus also grew, rising to $1.1 trillion by the end of the first half of 2024. This was supported by $100.6 billion in consolidated net income and equity capital, although it was partially offset by a $23 billion change in unrealized losses, $2.1 billion in other surplus losses, and $13.3 billion in shareholder dividends.

AM Best noted that while catastrophe losses were down year-over-year, they still impacted underwriting performance. However, the industry’s ability to generate investment income and build favorable reserves contributed to strong financial results in 2024.

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