The Federal Insurance Office (FIO) of the United States Department of the Treasury issued its seventh annual report on the United States insurance industry in September.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 mandates the report. In response to this statutory mandate, FIO has consistently produced detailed annual reports describing the overall United States insurance market and its place in the increasingly international aspects of cross-border insurance regulation.
The report has 107 pages of text and charts, and covers the calendar year 2017, in the United States insurance industry. For readers interested, they may click on the report’s image to obtain a copy.
The Report gives an overview of the U.S. insurance industry
The report presents and analyzes the financial performance and condition of the key U.S. insurance industry sectors: life and health, property and casualty, and health.
The industry financial overview includes analysis of the insurance industry’s capital markets activity, the increasing prominence of non-U.S. reinsurers, and the expanding role of alternative risk transfer mechanisms such as insurance-linked securities.
Some interesting facts culled from FIO’s report
In no particular order, the following are a random sampling of factoids from the 2018 Report:
- The United States remained the world’s largest single-country insurance market in 2017, with a 28 percent market share of global direct premiums written.
- There are 743 life & health insurers, 2,620 property and casualty insurers, and 1,130 health insurers licensed in the United States.
- Throughout 2017, there were 93 mergers and acquisition (M&A) transactions announced involving U.S. insurers, with a total value of $87.1 billion. The aggregate of the 2017 deals far surpassed the $21.6 billion in 2016 aggregate value based on the Aetna-CVS merger.
- In 2017, China overtook Japan as the second-largest single-country insurance market, with 11 percent of global direct premiums written.
- The combined ratio for the P&C sector increased significantly to approximately 103.8 percent in 2017, rising from 100.8 in 2016 and above 100 percent for the second consecutive year since 2012.
- Three major Category 4 hurricanes and one Category 1 storm that hit the United States, combined with severe California wildfires, pushed catastrophe losses to near record levels in 2017 and drove the increase in the combined ratio.
- Debt markets continued to be the preferred source of additional capital for insurers in 2017, despite a slight rise in interest rates. During the year, U.S. insurers raised an aggregate $54.3 billion in 116 separate debt offerings.
- InsurTech funding totaled $2.3 billion in 2017, the second highest annual total to date, and a 36 percent increase from 2016. In the first quarter of 2018, 66 InsurTech funding transactions took place, the highest number ever recorded.
- In 2017, 14 InsurTech startups received financial backing from some of the world’s largest insurers
- The U.S. cyber insurance market continued to grow in 2017, nearing $1.9 billion for standalone and package policies combined, a 32 percent increase over premiums in the prior year.
- Despite recent growth, cyber insurance remains a small portion of the over $550 billion U.S. P&C insurance market. Insurers reportedly are cautious in the face of uncertainty about the risk and cost of claims.
- The next statutory deadline for reauthorization by Congress of the National Flood Insurance Program (NFIP) is November 30, 2018.
- Beginning in January 2017, FEMA purchased reinsurance to lessen the NFIP’s net exposure to catastrophic losses. During 2018, FEMA recovered the entire $1.042 billion in reinsurance from its 2017 placement, for claims resulting from Hurricane Harvey.
- Capital and surplus in the L&H sector stood at approximately $395 billion as of December 31, 2017, the P&C industry reported policyholder surplus of roughly $764 billion, and the Health sector reported approximately $183 billion.
- For 2017 both the P&C stock index and L&H stock index underperformed the S&P 500 with each gaining 12 percent, compared to a 20 percent increase for the S&P 500
The following charts from the report list the top ten writers of P&C, life, and health insurance
Top ten property and casualty writers in 2017:
On a combined basis (including all lines of P&C business), State Farm Mutual Automobile Insurance Company remained the most significant writer of P&C business in 2017. The following chart from the report shows the top-ten writers of personal and commercial lines.
Top ten life and health writers in 2017
Over 2017, the market share rankings among the five largest writers of life insurance and annuities were unchanged. MetLife Inc. remained the most significant writer of life insurance products in the United States, followed by Prudential Financial Inc., New York Life, Principal Financial Group Inc., and Massachusetts Mutual Life Insurance Company.
Top ten accident and health writers in 2017:
United Health Group remained the largest writer of A&H lines in 2017, while Reliance Standard entered the top ten in tenth place, replacing AEGON NV. The following chart from the report shows the top-ten writers of accident & health insurance:
