US P&C insurers achieve record investment income

Written by Adam Cadle

29/05/2024

Net investment income in the US P&C insurance segment hit a record high in 2023 of $73.9bn, bolstered by the higher interest rate environment, AM Best has revealed.

The net investment income improvement represented a 1.4% increase over the previous year.

“Aggregate net underwriting income has been volatile in the last 10 years—and often negative across the industry—and so investment income remains vital to earnings,” said Helen Andersen, industry analyst, AM Best. “Property/casualty carriers have had to balance their risk appetites with the need for higher returns when deciding on investment strategies in a rapidly changing economic landscape.”

The report noted that the P&C industry had shifted to riskier assets in its portfolio in the search for higher yields, but the percentage of Schedule BA assets within the total portfolio dropped to 6.6% in 2023 from 8.1% in the previous year. At the same time, the share of total stocks increased dramatically in 2023, to $667bn from approximately $600bn. Stocks as a percentage of surplus increased by about 10 percentage points, to 70%, as growth in stock holdings outpaced growth in surplus.

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