Market Overview

Best's Special Report: Preliminary First-Half 2018 Results Show Improvement in Underwriting Income for U.S. Property/Casualty Industry

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The U.S. property/casualty industry's net underwriting income improved
in the first half of 2018 to $5.3 billion, compared with a $5.0 billion
underwriting loss in the same prior-year period. This financial review
is detailed in a new Best's Special Report, titled, "A.M. Best
First Look— First Half 2018 Property/Casualty Financial Results," and
the data is derived from companies' six-month 2018 interim statutory
statements that were received as of Aug. 20, 2018, representing an
estimated 97% of the total property/casualty industry's net premiums
written.

The first-half 2018 underwriting results were driven by growth in net
premiums written of 13.3% over the prior-year period, which offset a
3.8% increase in losses and loss adjustment expenses (LAE) incurred, a
12.9% rise in underwriting expenses and a 10.1% increase in policyholder
dividends. With a more normalized level of catastrophe losses in
first-half 2018, the industry's combined ratio improved 4.5 points from
the prior-year period to 96.4, the lowest six-month period combined
ratio for the last five years.

The property/casualty industry also recorded a $3.7 billion increase in
net investment income and a $2.0 billion increase in realized capital
gains. Coupled with the strong underwriting improvement, these items
boosted industry net income to $33.6 billion, an $18.7 billion increase
from the prior-year period.

To access a copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=277318.

A.M. Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
www.ambest.com
for more information.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

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