U.S. property-casualty insurers posted their first quarterly underwriting profit since 2009 after companies raised prices to cushion against low interest rates and costs from natural disasters.
The underwriting profit, which measures premium revenue minus expenses and claims costs, was $4.64 billion in the three months ended March 31, compared with a loss of $144 million a year earlier, according to a statement Monday from the Property Casualty Insurers Association of America and Verisk Analytics Inc.’s ISO unit.
Insurers have relied in recent years on investments to remain profitable, a strategy that was hindered when near record-low interest rates pressured income from bonds held to back policyholder obligations. The industry, which counts Allstate Corp. and American International Group Inc. among its largest publicly traded companies, has had an underwriting loss in 92 of the last 109 quarters, according to the statement.
The reversal in the first three months of this year is “especially welcome given the toll that long-term declines in interest rates and investment leverage have taken,” Michael R. Murray, assistant vice president for financial analysis at ISO, said in the statement-.
The Standard & Poor’s 500 Property & Casualty Insurance Index advanced 17 percent in the three months ended March 31, the best period since the third quarter of 2009. The benchmark climbed about 1.8 percent since the end of last quarter.
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