U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [1]
Property & Casualty Insurance Industry
PROPERTY & CASUALTY OVERVIEW
Near double-digit premium growth and a continuing trend of prior year reserve
releases were offset by increased catastrophe losses and worsening results in
personal auto. As a result, the property and casualty industry reported its first
underwriting loss since 2017, totaling $(39.0) million.
Continued strong performance in investment operations with a gain of $71.1
billion and miscellaneous income of nearly $2.0 billion offset the underwriting
loss and led to net income of $60.5 billion. Despite higher investment returns,
the investment yield declined to 2.60%, its lowest point in eleven years.
The combination of net income and unrealized capital gains of $86.8 billion
pushed policyholders’ surplus to a record high of $1.1 trillion at December 31,
2021.
U.S. Property and Casualty Insurance Industry Results
(in millions, except for percent)
YoY Chg 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Net Premiums Written 9.2% 719,815 658,913 642,984 621,786 561,952 537,926 524,006 506,657 486,462
465,743
Net Premiums Earned 7.4% 693,664 646,014 630,776 603,188 549,958 533,236 515,835 497,931 476,792
457,906
Net Losses Incurred 12.8% 432,474 383,308 378,582 366,258 353,954 323,195 296,749 284,934 263,576
283,985
Loss Expenses Incurred 1.1% 70,638 69,888 69,244 64,658 65,218 61,829 60,932 58,706 56,951
56,552
Underwriting Expenses 5.3% 189,487 179,964 173,055 168,228 151,672 148,692 145,753 139,846 136,586
130,809
Underwrting Gain (Loss) NM (39) 12,100 8,373 2,907 (22,459) (1,700) 11,453 14,658 20,127 (13,762)
Net Loss Ratio 2.4 pts 72.5% 70.2% 71.0% 71.4% 76.2% 72.2% 69.3% 69.0% 67.2%
74.4%
Expense Ratio (1.0) pts 26.3% 27.3% 26.9% 27.1% 27.0% 27.6% 27.8% 27.6% 28.1%
28.1%
Combined Ratio 0.9 pts 99.6% 98.7% 98.7% 99.1% 103.9% 100.5% 97.8% 97.3% 96.0%
103.1%
1yr Rsrv Devlp/PY PHS 0.8 pts (0.0%) (0.8%) (0.8%) (1.6%) (1.4%) (0.7%) (1.2%) (1.4%) (2.7%) (2.2%)
Net Invmnt. Inc. Earned 2.6% 52,932 51,596 55,132 53,287 48,978 45,539 47,228 46,401 46,594
48,041
Net Realized Gains (Loss) 64.5% 18,200 11,064 11,260 10,885 19,833 8,747 10,285 12,006 18,823
9,032
Net Invmnt. Gain (Loss) 13.5% 71,132 62,660 66,392 64,172 68,812 54,286 57,513 58,407 65,417
57,073
Investment Yield (0.15) pts 2.60% 2.75% 3.19% 3.24% 3.08% 3.01% 3.18% 3.17% 3.34%
3.61%
Total Other Income 240.0% 3,514 1,034 1,284 1,530 (4,687) 950 1,475 (2,908) (580)
2,305
Net Income
1
(4.9%) 60,537 59,196 62,229 57,565 38,717 42,860 56,884 56,439 69,725
36,486
Return on Revenue (0.4) pts 7.9% 8.4% 8.9% 8.6% 6.3% 7.3% 9.9% 10.1% 12.9% 7.1%
December 31, YoY Chg 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Policyholders' Surplus
2
12.8% 1,077,866 955,136 891,214 779,921 786,016 734,026 705,948 706,740 686,135
615,809
Return on Surplus (0.5) pts 6.0% 6.4% 7.4% 7.4% 5.1% 6.0% 8.1% 8.1% 10.7% 6.1%
1. Excludes investment income from affiliates. 2. Adjusted to eliminate stacking
For the year ended
December 31,
Inside the Report
Page No.
Market Conditions ....................... 2
Premium ...................................... 3
Underwriting Operations ......... 5-9
Investment Operations .............. 10
Net Income ................................ 10
Cash Flow & Liquidity ...........10,11
Capital & Surplus ....................... 11
Reserves ...............................11,12
Reinsurance ..........................12,13
Inflation ................................13,14
Cyber.......................................... 14
Title Industry
........................
15
-
1
8
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [2]
MARKET CONDITIONS
Premium Pricing
Market conditions continued to harden in most commercial products as insurers attempt to compensate for the
increased frequency and severity of natural catastrophes, the low interest rate environment in recent years, and most
recently, economic and social inflation. While existing carriers have increased rates and deductibles, improved market
conditions have also led to several new carriers entering the space in 2021, as an increase in the number of filers shows
within the chart at the bottom of this page. If this trend continues over time, it could drive rates lower as competition
increases.
According to the Council of Insurance Agents and Brokers (CIAB) fourth quarter Market Report, commercial premium
rates increased in all lines for seventeen consecutive quarters (see chart below), with the exception of workers’
compensation. Further, the CIAB indicated that commercial premium rates increased by an average of 8.1% for all lines
in Q4 2021, which included an 8.0% increase in commercial auto rates – marking 38 consecutive quarters of rate
increases within this line. The CIAB also indicated that workers’ compensation rates began increasing in the second
quarter of 2020 following 21 consecutive quarters of decreasing premium rates.
Source: The Council of Insurance Agents & Brokers, Commercial Property/Casualty Market Index – Q4/2021
Capacity
Twenty consecutive years of industry profits have contributed to an all-time high in policyholders’ surplus. As a result,
industry capacity has never been more abundant as evidenced by a net writings leverage ratio of 66.8%.
(5.0%)
-
5.0%
10.0%
15.0%
20.0%
25.0%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2017 2018 2019 2020 2021
All Commercial LOBs Commercial Auto Workers' Comp Commercial Property General Liability Umbrella
66.8%
60%
65%
70%
75%
80%
85%
90%
95%
100%
105%
110%
04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Net Writings Leverage
2,842
2,743
2,620
2580
2621
'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21
No. of P&C Filers
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [3]
PREMIUM
Direct premiums written (DPW) in the property and casualty
insurance industry rebounded from the prior year, which
was impacted by Covid, increasing 9.5% year-on-year (YoY)
to $797.5 billion in 2021. This represents the largest YoY
increase over the past ten years, which has averaged 4.8%.
The Personal Lines Market represented 49.4% of total DPW
and rose 6.0% due to increases in private passenger auto
liability of 3.3%, a 7.3% increase in auto physical damage
DPW, and an 8.4% increase in homeowners DPW as insurers
continued to respond to increased catastrophe loss severity
and frequency with rate increases.
DPW in the Commercial Lines Market represented 37.4% of
total DPW and saw a 12.9% increase during 2021. The other
liability line (35.5% of commercial DPW and 13.3% of total
DPW) increased 21.8% YoY as insurers continued to seek
rate increases to remain competitive among rising concerns
over increased claim severity, partly due to social inflation.
DPW in the workers’ compensation line increased 2.4% YoY
to $52.2 billion, driven by quarter-over-quarter growth in
the second half of the year as businesses have returned to
normal. Commercial multiple peril DPW increased 7.9% and
commercial auto liability, which has experienced challenges
in recent years (discussed in more detail later), saw a 19.0%
increase in DPW.
The Combined Lines Market represented 13.2% of total
industry DPW and consists primarily of allied lines, inland
marine, and fire insurance, all of which increased by double-
digits. Overall, DPW in the combined lines increased 15.2%
YoY.
Assumed premiums written increased 13.3% YoY to $668.2
billion, of which 88.5% was affiliated assumptions. U.S.
intercompany pooling agreements comprised 58.2% of
reinsured business, followed by 27.6% affiliated non-pooled
business. Ceded premiums written amounted to $745.9
billion, a 13.1% increase compared to last year. Overall, net
premiums written (NPW) increased 9.2% to $719.8 billion.
Geographically, premiums increased in nearly all states and
territories in 2021. The table on the following page shows
the change in DPW and pure direct loss ratio (PDLR) by state.
192,901
298,085
12 13 14 15 16 17 18 19 20 21
DPW Commercial Lines ($M)
259,196
393,736
12 13 14 15 16 17 18 19 20 21
DPW Personal Lines ($M)
70,369
105,693
12 13 14 15 16 17 18 19 20 21
DPW Combined Lines ($M)
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [4]
Direct Writings & Profitability by State and Territory
(in Millions except for percent)
YoY Chg 2021 2020 YoY Chg 2021 2020 2021 2020 2021
2020
AL
9.2%
10,841
9,929
(10.6) pts
61.9%
72.5%
6,476
7,041
10,469
9,712
AK
3.1%
1,711
1,660
(3.2) pts
47.8%
51.0%
798
844
1,670
1,654
AR
9.9%
14,093
12,825
7.3 pts
61.5%
54.2%
8,332
6,785
13,548
12,519
AR
6.3%
6,415
6,036
(2.5) pts
64.5%
67.0%
4,017
3,910
6,230
5,838
CA
11.0%
96,312
86,740
2.0 pts
56.2%
54.2%
51,888
45,962
92,253
84,767
CO
10.5%
16,368
14,811
3.0 pts
63.1%
60.1%
9,876
8,691
15,649
14,458
CT
8.6%
10,016
9,226
3.8 pts
61.0%
57.2%
5,908
5,219
9,692
9,128
DE
11.8%
3,262
2,918
(8.6) pts
52.4%
61.0%
1,641
1,775
3,135
2,911
DC
9.5%
2,328
2,127
(0.1) pts
46.3%
46.4%
1,032
962
2,228
2,072
FL
12.0%
66,397
59,277
(4.2) pts
60.4%
64.6%
37,927
37,141
62,844
57,538
GA
10.5%
26,514
24,002
0.2 pts
63.2%
63.0%
16,130
14,752
25,510
23,408
HI
8.2%
2,891
2,672
1.1 pts
47.0%
46.0%
1,310
1,221
2,786
2,656
ID
11.9%
3,849
3,439
4.9 pts
62.2%
57.3%
2,282
1,903
3,667
3,322
IL
11.1%
30,485
27,432
(5.1) pts
57.8%
62.9%
16,743
16,902
28,959
26,858
IN
9.2%
13,581
12,434
2.7 pts
56.0%
53.3%
7,361
6,503
13,138
12,204
IA
14.9%
8,055
7,009
(55.1) pts
61.7%
116.8%
4,815
8,027
7,807
6,873
KS
10.6%
7,896
7,142
8.9 pts
55.4%
46.5%
4,235
3,242
7,645
6,978
KY
6.8%
8,600
8,049
15.9 pts
68.6%
52.6%
5,737
4,210
8,369
7,999
LA
5.7%
13,256
12,539
48.6 pts
166.6%
118.1%
21,362
14,656
12,819
12,414
ME
8.9%
2,771
2,544
(13.3) pts
48.0%
61.3%
1,285
1,531
2,674
2,496
MD
6.3%
13,781
12,968
0.6 pts
53.7%
53.1%
7,217
6,818
13,429
12,832
MA
8.9%
18,331
16,839
0.5 pts
48.4%
47.9%
8,560
7,889
17,684
16,468
MI
3.0%
21,331
20,713
8.4 pts
63.6%
55.3%
13,336
11,434
20,955
20,695
MN
9.6%
14,037
12,804
(3.0) pts
59.1%
62.1%
8,028
7,805
13,593
12,567
MS
9.8%
6,343
5,774
(7.3) pts
60.0%
67.4%
3,669
3,807
6,109
5,651
MO
9.1%
14,263
13,077
(4.2) pts
58.1%
62.3%
8,027
7,964
13,810
12,782
MT
13.4%
3,073
2,709
8.3 pts
64.7%
56.4%
1,887
1,489
2,915
2,641
NE
11.9%
6,073
5,427
(1.3) pts
55.3%
56.6%
3,263
3,002
5,896
5,302
NV
10.2%
7,050
6,395
2.3 pts
58.6%
56.3%
3,955
3,518
6,749
6,247
NH
8.2%
2,834
2,620
2.4 pts
45.2%
42.7%
1,245
1,110
2,756
2,598
NJ
8.4%
24,785
22,872
8.7 pts
65.8%
57.1%
15,771
12,940
23,982
22,659
NM
6.7%
4,041
3,787
7.2 pts
59.4%
52.2%
2,328
1,944
3,920
3,727
NY
9.7%
55,034
50,150
(0.1) pts
61.6%
61.7%
32,545
30,443
52,792
49,312
NC
8.9%
19,677
18,073
3.4 pts
58.4%
54.9%
11,080
9,717
18,987
17,688
ND
12.8%
2,991
2,651
17.8 pts
92.0%
74.2%
2,688
1,955
2,923
2,636
OH
8.2%
19,747
18,247
(0.3) pts
53.6%
53.9%
10,216
9,649
19,077
17,908
OK
7.5%
9,354
8,699
6.4 pts
62.4%
56.0%
5,645
4,808
9,044
8,586
OR
8.5%
8,533
7,864
(16.7) pts
59.9%
76.7%
4,951
5,929
8,259
7,735
PA
7.3%
28,340
26,422
1.3 pts
58.3%
57.0%
15,997
14,925
27,433
26,164
RI
7.4%
2,880
2,682
2.3 pts
54.9%
52.5%
1,553
1,393
2,831
2,651
SC
8.7%
12,103
11,134
(2.7) pts
55.7%
58.4%
6,518
6,375
11,697
10,911
SD
16.9%
3,049
2,609
(10.4) pts
65.2%
75.6%
1,931
1,938
2,960
2,563
TN
8.9%
14,200
13,038
(13.2) pts
59.4%
72.7%
8,133
9,245
13,688
12,723
TX
10.7%
70,749
63,931
20.2 pts
79.0%
58.8%
53,345
36,659
67,520
62,326
UT
11.0%
6,344
5,715
(7.7) pts
55.8%
63.5%
3,374
3,511
6,044
5,530
VT
(6.0%)
1,417
1,508
3.4 pts
45.1%
41.7%
625
622
1,386
1,489
VA
8.0%
16,597
15,361
2.5 pts
53.7%
51.2%
8,651
7,730
16,115
15,105
WA
9.3%
15,263
13,970
7.8 pts
62.1%
54.3%
9,121
7,453
14,699
13,732
WV
4.9%
3,141
2,994
7.4 pts
54.1%
46.7%
1,669
1,415
3,084
3,029
WI
7.2%
12,160
11,348
3.8 pts
54.1%
50.4%
6,426
5,626
11,871
11,171
WY
9.8%
1,457
1,326
(12.6) pts
46.3%
59.0%
643
763
1,388
1,295
AS
(72.3%)
0
0
(131.1) pts
(117.6%)
13.5%
(0)
0
0
0
GU
(0.4%)
316
318
6.4 pts
50.1%
43.7%
153
135
305
309
PR
5.3%
2,599
2,467
(55.1) pts
11.6%
66.7%
288
1,600
2,492
2,401
VI
(9.4%)
176
194
25.6 pts
27.3%
1.7%
51
3
186
183
MP
(1.7%)
22
22
129.0 pts
186.1%
57.1%
38
13
20
22
Totals 9.5% 797,532 728,174 2.6 pts 62.2% 59.6% 477,165 425,385 767,008 713,504
State
Direct Premiums Written
Pure Direct Loss Ratio
Losses Incurred
Premiums Earned
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [5]
UNDERWRITING OPERATIONS
Following three consecutive years of underwriting gains,
the property and casualty insurance industry reported an
underwriting loss of $39.0 million for 2021. The
underwriting loss came despite a 7.4% increase in net
premiums earned, however, net losses and Loss
Adjustment Expense (LAE) incurred increased 11.0%
primarily due to higher catastrophe losses and worsening
results in personal auto. Although underwriting expenses
increased, the expense ratio was 1.0-point lower than
last year due to the growth in net premiums written.
Overall, the combined ratio worsened by nearly 1.0-point
to 99.6% (72.5% net loss ratio and 27.3% expense ratio).
Catastrophes
According to the National Centers for Environmental
Information, National Oceanic and Atmospheric
Administration (NOAA), there were 20 weather/climate
disaster events with total losses of more than $1 billion in the U.S. in 2021. These events included 11 severe storms, 4
tropical cyclones, 2 floods, 1 wildfire event, and 1 winter storm. Overall costs for these events were $148.0 billion. The
costliest events are discussed below.
Tropical Cyclones – Overall costs of tropical cyclones were roughly $80.2 billion. Hurricane Ida, the costliest natural
disaster in 2021, with overall losses estimated at $65.0 billion, made landfall as a category 4 storm in Louisiana.
Severe Storms – There were 11 severe storms with an overall cost of $20.8 billion in 2021. The most significant event
occurred in September in the central and southeastern regions of the U.S. Several reports indicated that dozens of
tornadoes with wind speeds of up to 190 miles per hour impacted six states, with Kentucky receiving the most damage.
The city of Mayfield was hardest hit when an EF4 tornado destroyed large parts of the city. Overall losses totaled
roughly $5 billion for this event.
Winter Storm – In February, a cold wave brought freezing temperatures and record snowfall in the central U.S.,
impacting areas as far south as Houston, Texas. Texas was primarily impacted as the state’s energy, infrastructure, and
buildings were inadequately prepared for such conditions. Snow and ice also caused widespread road closures, leaving
thousands of people stranded. This event caused roughly $24.5 billion in overall losses.
The annual average of $1 billion dollar events from 1980 to 2021 is 7.7 events. The annual average for the most recent
5 years is 17.8 events (CPI-adjusted). Since 1980 the U.S. has sustained a total of 323 events where overall costs reached
or exceeded $1 billion. The table below shows the distribution of damage from U.S. billion-dollar disasters by time
period.
Time Period Billion Dollar Disasters Events per Year Overall Cost
1980-1989 31 3.1 $195.2B
1990-1999 55 5.5 $298.4B
2000-2009 67 6.7 $558.0B
2010-2019 128 12.8 $891.5B
Last 5 yrs. (2017-2021) 89 17.8 $764.9B
Last 3 yrs. (2019-2021) 56 18.7 $306.6B
2021 20 20.0 $148.0B
Source: NOAA National Centers for Environmental Information (NCEI) U.S. Billion-Dollar Weather and Climate Disasters
(2022). https://www.ncei.noaa.gov/access/billions/, DOI: 10.25921/stkw-7w73
90%
95%
100%
105%
110%
($30)
($20)
($10)
$0
$10
$20
$30
12 13 14 15 16 17 18 19 20 21
U/W Income ($B) Combined Ratio
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [6]
Impact to States: The table to the right shows the deterioration in the
PDLR in the states primarily impacted by the largest natural disasters in
2021
Personal Lines Market
The personal lines market comprised half of industry premiums in 2021 and experienced a downturn in operating
results due to the increase in natural catastrophes noted above, and a deterioration in personal auto results. The
combined ratio worsened 5.5-points to 102.1%.
Personal Auto
In 2021, business activity returned to normal levels following the 2020 COVID-19 shutdowns that resulted in less driving
and auto claims activity. However, during 2021 results normalized as claims activity returned to typical frequency
compounded by inflation and supply chain issues that boosted the cost of claims. Overall, net losses incurred totaled
$95.4 billion for the private passenger auto liability line versus $81.4 billion in 2020. Private passenger auto physical
damage net losses incurred increased 35.7% YoY to $73.8 billion.
As seen in the charts above, the pure net loss ratio (PNLR) in private passenger auto liability (20.6% of total NPW in
2021) worsened 7.6-percentage points to 76.0%, while private passenger auto physical damage (14.5% of total NPW)
saw a 17.0-percentage point deterioration to 80.1%.
Homeowners
While results slightly improved, the homeowners line was unprofitable again in 2021 with a combined ratio of 103.8%,
down from 107.4% in 2020. In recent years, an increase in frequency and severity of natural catastrophes placed
pressure on homeowners profitability, with underwriting losses in four of the last five years. While many insurers have
102.6%
98.4%
99.6%
100.9%
102.7%
104.0%
99.4%
98.7%
96.7%
102.1%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Personal Lines Combined Ratio
State
Chg. In PDLR
PDLR 2021
PDLR 2020
LA
48.6-pts
166.6%
118.1%
KY
15.9-pts.
68.6%
52.6%
TX
20.2-pts.
79.0%
58.8%
NJ
8.7-pts.
65.8%
57.1%
82.3%
77.3%
78.4%
68.4%
76.0%
2017 2018 2019 2020 2021
PNLR Private Psgr. Auto Liab.
75.2%
70.4%
71.2%
63.1%
80.1%
2017 2018 2019 2020 2021
PNLR Private Psgr. Auto Phys. Dmg
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [7]
raised premiums in response to the increase in natural disasters, inflation has been the latest headwind for the
industry, as the price of building materials, labor, and fuel has been on the rise.
Commercial Lines Market
Overall, commercial lines performed better in 2021 as evidenced by a combined ratio of 96.9%, as seen in the chart
below. Increased pricing in the commercial market provided a boost to insurers’ bottom lines. However, certain liability
lines continued to face challenges, as many had combined ratios over 100 percent. The largest liability lines of business
in the commercial market are discussed in more detail below:
Other Liability-Occurrence
Various types of coverage fall within the other liability line,
including, professional, environmental, general liability, directors
and officers (D&O), and employers’ liability. Loss costs have
trended upward in recent years primarily due to adverse
development of prior accident year reserves and rising costs due to
social inflation. D&O liability saw a 13.0% increase in premium rates
according to the CIAB report, the second highest premium increase
among all commercial lines behind umbrella, likely due to higher
incurred losses which have increased 76.8% over the past five
years. Overall, the combined ratio for the other liability-occurrence
line was 99.0%, the first year since 2013 it was below 100 percent.
Commercial Multiple Peril (Liability Portion)
Commercial multiple peril covers a variety of risk exposures
including, but not limited to, fire, allied lines, difference in
conditions, and various liability coverages. The combined ratio for
the non-liability portion improved 2.9-points to 109.2% in 2021.
Results in the liability portion of commercial multiple peril
improved slightly, evidenced by a 4.4-point improvement in the
combined ratio to 101.2%. Despite the slight YoY improvement, this
line has been unprofitable for six consecutive years and nine out of
the last eleven years. Litigation trends have been largely to blame
for the trend in poor results.
105.0%
96.9%
99.1%
98.3%
102.0%
100.8%
98.0%
101.3%
101.7%
96.9%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Commercial Lines Combined Ratio
101.6%
103.6%
108.1%
105.6%
101.2%
2017 2018 2019 2020 2021
Commercial Multi-Peril Combined Ratio
101.6%
105.2%
109.8%
109.5%
99.0%
2017 2018 2019 2020 2021
Other Liab-Occurrence Combined Ratio
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [8]
Commercial Auto Liability
A trend of underwriting losses within the commercial auto liability
space continued, a trend that began in 2011. Adverse development
of prior accident year reserves and a sharp rise in nuclear verdicts
have contributed to the negative trend. Insurers have increased
rates each quarter for 38 consecutive quarters, according to the
CIAB (see CIAB report on page 2). The combined ratio for the
current year was 101.4%, a small improvement compared to
107.1% for 2020.
Medical Professional Liability
Medical professional liability insurance protects physicians and
health care professionals from liability associated with wrongful
practices that result in bodily injury, medical expenses, and
property damage. It also covers the cost of legal fees to defend an
insured, and judgements or settlements resulting from claims and
lawsuits. This line of business has generated poor underwriting
results for eight consecutive years due to a trend of rising loss costs
and diminishing prior year reserve takedowns. For the current year,
the growth in net premiums earned increased at a greater rate than
net losses incurred, resulting in a small improvement in the
combined ratio to 108.0%.
Workers’ Compensation
Workers’ compensation is the second largest commercial line at
6.2% of total net premiums written in 2021 and has seen eight
consecutive years of underwriting profits due, in large part, to the
release of prior accident year reserves. As a result, market
conditions have been soft, as average premium pricing decreased
each quarter from 1Q-2015 to 1Q-2020 and has recently been flat
(as noted on page 2). While workers’ compensation remained
profitable in 2021, a slight deterioration was noted as the combined
ratio worsened 0.9-points to 91.9%. In addition, the accident year
loss ratio has increased each year since 2016 to 76% for the 2021
accident year. Overall, the profitable trend within this line is largely
due to prior year reserve releases.
113.5%
111.7%
114.0%
107.1%
101.4%
2017 2018 2019 2020 2021
Commercial Auto Liab Combined Ratio
101.4%
104.1%
112.2%
112.1%
108.0%
2017 2018 2019 2020 2021
Medical Prof Liab Combined Ratio
92.2%
86.2%
88.5%
91.0%
91.9%
2017
2018
2019
2020
2021
Workers' Compensation Combined
Ratio
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [9]
Combined Ratio by Lines of Business
Lines of Business 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012
Aggregate Write-ins 116.7% 108.7% 76.2% 81.1% 41.2% 83.5% 83.7% 125.4% 64.0% 56.3%
Aircraft (all perils) 90.9% 107.0% 131.2% 111.5% 109.2% 113.1% 100.7% 89.1% 99.5% 98.5%
Allied Lines 104.6% 112.5% 105.0% 130.7% 182.0% 96.6% 88.1% 85.4% 85.3% 129.9%
Boiler and Machinery 71.5% 85.9% 72.8% 86.3% 76.5% 78.8% 69.9% 76.1% 72.4% 80.1%
Burglary and Theft 86.6% 113.8% 74.2% 78.1% 49.1% 46.2% 61.4% 59.9% 42.2% 58.6%
Commercial Auto Liab 101.4% 107.1% 114.0% 111.7% 113.5% 113.2% 111.3% 103.6% 107.5% 106.3%
Commercial Auto Phy Dmg 90.2% 85.3% 95.5% 97.0% 104.2% 102.0% 100.9% 103.1% 104.9% 109.1%
Commercial MP (Liab) 101.2% 105.6% 108.1% 103.6% 101.6% 105.6% 99.3% 103.5% 103.0% 94.1%
Commercial MP (Non-Liab) 109.2% 112.1% 103.1% 108.4% 111.8% 99.1% 91.9% 97.1% 94.4% 114.6%
Credi t 78.1% 108.2% 84.9% 93.6% 90.8% 92.1% 76.5% 74.7% 74.9% 91.3%
Credi t A & H 95.5% 106.5% 86.7% 84.8% 128.3% 120.9% 42.3% 45.2% 45.0% 49.5%
Earthquake 36.8% 37.2% 28.7% 44.6% 43.6% 33.9% 28.5% 34.3% 30.5% 36.7%
Excess Workers' Comp 105.2% 89.4% 113.8% 116.6% 123.6% 109.2% 112.0% 107.4% 69.3% 151.4%
Farmowners MP 97.2% 106.2% 99.3% 97.0% 105.7% 91.1% 89.9% 95.4% 94.0% 99.5%
Fidelity 65.8% 78.8% 90.6% 73.4% 74.0% 78.4% 77.2% 92.7% 92.9% 99.3%
Financial Guaranty 46.8% 246.3% 181.7% 130.5% 320.1% 177.2% 99.2% 91.3% (3.4%) 181.2%
Fire 105.9% 103.7% 95.8% 110.8% 119.2% 92.3% 85.1% 85.4% 78.5% 86.5%
Group A & H 94.8% 92.2% 97.8% 90.7% 90.5% 98.4% 100.1% 96.9% 99.9% 94.1%
Homeowners MP 103.8% 107.4% 98.6% 104.1% 107.8% 93.4% 92.1% 92.7% 90.3% 104.0%
Inland Marine 86.9% 97.5% 86.5% 86.4% 90.0% 84.0% 83.9% 83.5% 83.8% 96.2%
International 107.9% 106.7% 153.4% 145.3% 130.7% 144.3% 2.0% 116.7% 92.6% 91.5%
Medical Prof Liab 108.0% 112.1% 112.2% 104.1% 101.4% 106.4% 102.3% 104.7% 89.4% 93.3%
Mortgage Guaranty 31.5% 62.8% 32.8% 29.2% 40.4% 49.8% 58.1% 70.2% 98.0% 189.7%
Multiple Peril Crop 94.9% 100.3% 108.6% 85.0% 84.1% 81.7% 99.9% 104.9% 103.3% 104.0%
Ocean Marine 100.7% 98.0% 105.2% 100.2% 110.5% 95.8% 94.7% 91.2% 98.1% 109.2%
Other A & H 111.8% 98.4% 128.0% 149.6% 133.1% 128.6% 132.0% 126.6% 132.5% 133.0%
Other Liab - Claims-Made 93.7% 100.4% 97.6% 91.0% 98.9% 103.4% 98.6% 88.1% 97.4% 100.4%
Other Liab - Occur 99.0% 109.5% 109.8% 105.2% 101.6% 114.9% 103.3% 101.5% 96.4% 104.9%
Private Crop 122.0% 148.3% 117.5% 126.9% 107.5% 122.3% 146.2% 138.8% NA NA
Private flood 65.0% 50.6% 59.6% 55.0% 186.2% 93.1% NA NA NA NA
Products Liability 100.5% 87.9% 108.6% 122.9% 102.1% 119.8% 130.6% 134.4% 155.2% 102.2%
Prvt Psgr Auto Liab 99.8% 94.8% 101.6% 100.4% 105.5% 109.5% 107.9% 103.8% 103.5% 103.2%
Prvt Psgr Auto Phy Dmg 103.9% 89.2% 94.6% 93.6% 98.2% 101.7% 99.5% 100.3% 98.7% 100.2%
Reinsurance-Nonproportional 108.2% 101.2% 98.1% 109.1% 122.8% 78.6% 72.3% 63.2% 72.9% 79.8%
Surety 69.6% 79.4% 71.3% 70.9% 72.2% 72.4% 73.8% 69.3% 72.7% 76.8%
Warranty 87.7% 84.1% 104.8% 95.4% 90.6% 88.8% 107.9% 93.5% 104.2% 99.5%
Workers' Comp 91.9% 91.0% 88.5% 86.2% 92.2% 95.4% 95.9% 102.6% 98.8% 111.2%
NA = Not Available
Note: Federal Flood is not shown due to negative combined ratio results
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [10]
INVESTMENT OPERATIONS
Net investment income rebounded from a periodic
downturn last year driven by the pandemic. Net
investment gains increased 13.5% to $71.1 billion
versus $62.7 billion last year. Realized capital gains
jumped 64.5% to $18.2 billion, as gains on unaffiliated
common stocks more than doubled to $14.3 billion and
gains on affiliated common stocks were $800.9 million
versus losses of $1.4 billion last year. The industry
reported a $3.9 billion realized gain from bonds, down
40.1% from last year as gains from U.S. Government
bonds were down 97.3% to $83.2 million. Further, gains
on other invested assets were down 35.7% to $2.6
billion. Net investment income earned increased 2.6%
YoY to $52.9 billion. Investment income earned was
primarily derived from bonds at 50.4% of the total,
while stocks comprised 25.9%, and other invested assets
18.0%. Despite the continued solid investment results,
investment yield continued its downward trend to
2.60% versus 2.75% last year.
Bonds continued to comprise the majority of cash and
invested assets accounting for 48.6% of the total at
December 31, 2021. However, the low interest rate
environment has pressured insurers to seek investment
gains through more risky investments. The industry’s
cash and invested assets composition is shown in the
chart to the right.
NET INCOME
The property and casualty insurance industry reported
net income of $60.5 billion for the year, a 2.3%
improvement compared to last year, primarily driven by
the above-mentioned $71.1 billion in investment gains.
Return on revenue—a measure of net income to net
premiums earned, net investment income earned, and
realized capital gains (losses)—was slightly lower at 7.9%
versus 8.4% for the prior year.
CASH & LIQUIDITY
Net cash provided by operating activities increased
25.8% to $124.3 billion. Premiums collected net of
reinsurance rose 9.1% to $713.1 billion, leading to an
8.7% increase in operating cash inflows. Benefit and loss
related payments rose 8.0% to $378.7 billion and
policyholder dividends decreased 43.7% or $3.6 billion
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
$0
$10
$20
$30
$40
$50
$60
'12 '13 '14 '15 '16 '17 '18 '19 '20 '21
Investment Income ($B)
Investment Income Earned Net Realized Gains (Losses)
Investment Yield
0%
2%
4%
6%
8%
10%
12%
14%
16%
$0
$10
$20
$30
$40
$50
$60
$70
$80
'12 '13 '14 '15 '16 '17 '18 '19 '20 '21
Profitability ($B)
Net Income ROR
Bonds
48.6%
Unaffiliated Equities
21.4%
Affiliated Equities
14.1%
Other Long-term
Investments
7.5%
Cash & S-T
Investments
6.2%
Other
2.3%
Cash & Invested Assets at Dec. 31, 2021
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [11]
Cash and Liquidity, Continued…
to $4.6 billion. Overall, cash outflows were 5.9% or $36.2 billion higher than 2020.
The industry liquidity ratio improved 2.0-points to 75.2% since the prior year end. Liquid assets increased 14.8% while
adjusted liabilities increased at a lesser pace of 11.9%.
CAPITAL & SURPLUS
Industry aggregated policyholders’ surplus (adjusted for
affiliated investments) increased 12.8% to an all-time
high of $1.1 trillion at December 31, 2021 versus $955.1
billion at the prior year end.
Twenty consecutive years of industry profits have fueled
growth in surplus as this figure has increased 275.0%
since 2002. Along with net income, adjusted unrealized
gains of $86.8 billion boosted surplus for the current
year.
Return on surplus—a measure of net income to average
policyholders’ surplus—was 0.4-points lower than last
year at 6.0%.
LOSS & LAE RESERVES
Total Loss and LAE reserves increased 8.5% to $797.7 billion and was comprised of $665.2 billion unpaid losses and
$132.5 billion unpaid LAE. Reserve leverage improved 3.0-points to 74.0% compared to 77.0% at the prior year-end.
The trend of favorable prior year reserve development continued with a one-year redundancy of $7.0 billion and a
two-year redundancy of $7.8 billion. Current market conditions, which have prompted insurers to increase rates,
particularly in the commercial market, have offset concerns from recent rising economic and social inflation. However,
prolonged inflation could impact the accuracy of reserves.
($25.0)
($20.0)
($15.0)
($10.0)
($5.0)
$0.0
12 13 14 15 16 17 18 19 20 21
Prior Year Reserve Development ($B)
One-Year Two-Year
-
20%
40%
60%
80%
100%
120%
$540
$560
$580
$600
$620
$640
$660
$680
$700
$720
$740
$760
$780
$800
$820
12 13 14 15 16 17 18 19 20 21
Net Reserves ($B) Reserve Leverage
0%
2%
4%
6%
8%
10%
12%
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
'12 '13 '14 '15 '16 '17 '18 '19 '20 '21
Policyholders' Surplus ($B)
PHS ROS
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [12]
REINSURANCE
The following table is a snapshot of the insurance industry’s professional reinsurers, or those insurers that account for
75% of the industry’s unaffiliated assumptions.
$(50,000)
$(40,000)
$(30,000)
$(20,000)
$(10,000)
$-
$10,000
$20,000
(Thousands)
PY Reserve Development by LOB in 2021
Professional Reinsurers Financial Snapshot
(in millions, except for percent)
2021
2020 2019
2018
2017
2016
2015
2014 2013 2012
Unaffiliated APW
57,973
56,827
44,083
39,369
37,342
36,487
36,432
35,869
34,514
35,883
Net Premiums Written
135,830
100,393
97,665
102,364
78,930
73,687
78,029
86,744
64,407
55,497
Net Premiums Earned
129,328
96,084
95,537
96,362
73,471
72,117
75,213
82,367
60,604
54,927
Net Losses Incurred
84,049
62,887
60,662
64,632
52,949
43,799
42,049
47,613
30,774
36,730
Loss Expenses Incurred
11,033
8,997
9,225
9,165
7,197
6,953
7,815
8,903
6,009
5,916
Underwriting Expenses
34,382
26,446
26,438
27,725
21,196
20,816
21,631
21,801
19,205
15,688
Underwriting Gain (Loss)
(165)
(2,260) (765)
(5,065)
(7,867)
528
3,697
4,096
4,619
(3,405)
Net Loss Ratio
73.5%
74.8%
73.2%
76.6%
81.9%
70.4%
66.3%
68.6%
60.7%
77.6%
Expense Ratio
25.3%
26.3%
27.1%
27.1%
26.9%
28.2%
27.7%
25.1%
29.8%
28.3%
Combined Ratio
98.8%
101.2%
100.2%
103.7%
108.7%
98.6%
94.1%
93.8%
90.6%
106.0%
Net Investment. Inc. Earned
13,417
12,966
14,720
17,021
12,587
11,794
13,087
19,503
15,699
13,846
Net Realized Gains (Loss)
3,074
5,810
3,464
2,423
2,875
2,443
2,142
3,219
10,081
521
Net Investment. Gain (Loss)
16,491
18,776
18,184
19,443
15,462
14,237
15,229
22,722
25,780
14,368
Investment Profit Ratio
12.8%
19.5%
19.0%
20.2%
21.0%
19.7%
20.2%
27.6%
42.5%
26.2%
Net Income
15,005
16,119
15,324
13,584
1,055
13,283
16,010
21,120
26,625
9,617
Return on Revenue
10.3%
14.0%
13.5%
11.7%
1.2%
15.4%
17.7%
20.1%
30.8%
13.9%
For the year ended
December 31,
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [13]
Assumed premiums written in the property and casualty industry totaled $668.2 billion, a 13.3% increase compared to
$590.0 billion in 2020. Affiliated assumptions totaled $591.6 billion and unaffiliated totaled $76.6 billion. The
professional reinsurance market consists of the reinsurers that comprise 75% of the total unaffiliated assumptions. In
2021, 25 reinsurers assumed $58.0 billion in premiums. As seen in the table on the previous page, underwriting results
within the professional reinsurance market have been negative for five consecutive years, primarily due to the increase
in frequency and severity of natural catastrophes in recent years. For the current year the underwriting loss totaled
$165 million versus $2.3 billion last year. The combined ratio improved 2.4-points to 98.8%. Strong investment returns
and total other income of $1.1 billion (mostly due to a large retroactive reinsurance gain from one reinsurer) resulted
in net income of $15.0 billion, a decrease of $1.1 billion compared to last year.
The reinsurance market has hardened recently, particularly for loss-impacted property lines due to elevated
catastrophe loss activity. In addition, lower investment returns, and most recently, a trend of increasing loss severity
in liability lines, have caused reinsurers to increase rates.
EMERGING RISKS
Social Inflation
Social inflation is a term used to describe the potential for rising insurance claim costs resulting from increased
litigation, broader definitions of liability, more plaintiff-friendly legal decisions, and larger compensatory jury
awards. Social inflation has the potential to emerge through both traditional product liability exposures (e.g., asbestos
or opioids) as well as behavioral liability exposures (e.g., breach of privacy, sexual misconduct, or corporate
misconduct). In addition, social inflation exposures can emerge under various lines of coverage (e.g., general liability,
products liability, or workers’ compensation).
Emerging prevalence of litigation financing firms, whereby third-party capital is now being made available to finance
the pursuit of class-action and mass tort lawsuits is considered the primary driver of social inflation. Hedge fund
managers now see multibillion-dollar lawsuits as valuable investments as legal fund investment units are popping up
within hedge funds. Third party litigation finance totaled $17 billion in 2021 according to a December 2021 Swiss Re
report, U.S. Litigation Funding and Social Inflation. In addition, a recent study produced by the Insurance Information
Institute and the Casualty Actuarial Society found that social inflation increased claims for commercial auto liability by
over $20 billion between 2010 and 2019, which represented a 14% increase above projected losses.
Supporters of third-party financing believe it is a way to create equity and fairness and balance the interests between
consumers and insurance companies. Insurers claim that shock verdicts have led to reduced liability coverage and
higher pricing in the liability market and have called for government and regulatory assistance to put controls in place,
including transparency about litigation funding programs.
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
Reinsurance -
nonpro
assumed
property
Reinsurance -
nonpro
assumed
liability
Other liability
- occurrence
Home Commercial
multiple peril
Prvt Psgr auto
liab.
Fire Allied lines Workers'
compensation
Other liability
- claims-made
Unaffiliated Assumptions by Largest Lines of Business ($M)
2021 2020
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [14]
Economic Inflation
The U.S. economy has shown signs of rising inflation, with various measures spiking to their highest levels in over forty
years. Rising economic inflation in recent months has had impact on loss costs, which could impact reserve adequacy
and underwriting profitability for many lines of business. This has been more evident in property coverages as supply
chain issues have led to higher costs for building materials, replacement parts, and labor. In addition, rising inflation
has the potential to impact the value of a wide range of assets held by insurers, particularly fixed income holdings that
are not able to be held to maturity. Finally, inflation has the potential to lead to rapidly rising interest rates, which
could drive increased surrender activity, margin calls on certain derivatives, and have other significant life insurance
product impacts.
Cyber Insurance
While cyber coverage is not a new risk to the industry,
it continues to evolve as the demand continues to
skyrocket and data breaches has become more
widespread. According to the Council of Insurance
Agents and Brokers (CIAB) Q4 Market Report, cyber
was the most troubled line of business in Q4 2021 as
respondents reported an average premium increase of
34.3% compared to Q4 2020. The CIAB noted that
historical underpricing and an increase in frequency
and severity of cyberattacks have had a significant
impact on the market. In Q4 2021, 76% of respondents
reported a decrease in underwriting capacity, the
highest of any commercial line of business. Further,
carriers were reducing cyber limits and imposing more
restrictive terms and higher deductibles.
Despite reduced capacity, cyber insurance direct premium written increased 75.0% YoY to $4.8 billion in 2021, of which
65.3% consisted of stand-alone policies and 34.7% package policies. At the same time, policies in force decreased to
3.7 million from 4.0 million a year ago, while the total number of claims reported climbed to 25,667 from 22,718. Direct
losses increased 30.5% to $1.6 billion. As seen in the chart below, stand-alone coverage has become by far the most
popular coverage with businesses in recent years due to broader coverage options. The PDLR for stand-alone coverage
was 65.0% in 2021 versus 72.7% in 2020.
$746
$898
$912
$1,010
$1,462
$994
$1,114
$1,265
$1,640
$3,152
2017 2018 2019 2020 2021
Cyber Premium ($M)
Package Stand-Alone
$85
$898
$117
$251
$382
$141
$220
$342
$700
$898
2017 2018 2019 2020 2021
Cyber Paid Losses ($M)
Package Stand-Alone
Source: The Council of Insurance Agents & Brokers, Commercial
Property/Casualty Market Index
–
Q4/2021
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [15]
Title Insurance Industry
Premium
Title industry premiums written were almost entirely on a direct basis through either direct operations or agency
operations. Non-affiliated agencies represented 64.6% of Direct Premiums Written (DPW) in 2021. Overall, DPW
increased 35.9% to $26.4 billion in 2021 due to higher average revenue from both commercial and residential purchase
transactions driven by increased real estate values. Net premiums written totaled $26.3 billion, indicating that
reinsurance is rarely used by title insurers. Net retention increased 0.1 points to 99.7%.
The five largest states by DPW (TX, FL, CA, NY, and PA) saw
Florida move up one spot to second but were otherwise
unchanged from recent years. These five states represent
46.3% of the 2021 market, up 1.0 point from 2020. Four
of the five (excluding CA) saw year-on-year (YoY) DPW
growth above the average of 35.9%. Puerto Rico (109.2%),
Delaware (66.6%), Rhode Island (53.4%), Florida (52.1%)
and Wyoming (51.9%) all grew over 50% by DPW, while
Northern Mariana Islands (-35.9%) was the only decrease
and Oregon (13.2%) saw the smallest growth.
$2.8 B
$2.0 B
$2.0 B
$1.9 B
$1.7 B
$16.9 B
$12.2 B
$9.8 B
$9.2 B
$9.2 B
$6.5 B
$5.1 B
$4.1 B
$3.7 B
$3.7 B
$0
$5 B
$10 B
$15 B
$20 B
$25 B
$30 B
20212020201920182017
Direct Premiums Written: Title ($B)
Direct Ops. Non-Aff. Agency Ops. Aff. Agency Ops.
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [16]
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development March 2022 report indicated
that during 2021, there were 1.6 million new housing starts (non-seasonally adjusted), up 16.0% from 2020. Seasonally
adjusted new housing starts were up 3.9% in March 2022 vs March 2021 (4.8% without seasonal adjustment). This
growth in housing starts is concentrated in the Northeast, with some growth in the West, and decreases in the Midwest
and the South. New housing permits and starts have seen strong growth since March 2020, while new housing
completions are down 13.0% vs March 2021 and slightly above (2.8%) March 2020.
$ amounts
per policy
# Policies
Net
Premiums
Earned
Direct
Losses
Paid
Direct
Allocated
LAE Paid
Direct
Losses and
LAE
incurred
Direct
Known
Claim
Reserves
Direct
2021
2,174,237 $1,294
$33
$23
$49
$66
2020
1,889,654 $1,102
$35
$25
$61
$71
Non-affiliated Agents
2021
15,879,032 $1,040
$8
$7
$19
$24
2020
12,878,232 $927
$10
$10
$20
$30
Affiliated Agents
2021
7,446,772 $843
$8
$7
$12
$18
2020
6,438,910 $781
$8
$8
$16
$19
Overall
2021
25,500,041 $1,004
$10
$9
$19
$26
2020
21,206,796 $898
$12
$11
$23
$30
-40.0%
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
PR
DE
RI
FL
WY
IA
CT
AR
OK
NY
TN
ME
VT
AL
PA
NC
MD
SC
TX
NJ
MS
OT
ID
VA
MT
GA
SD
VI
AZ
IL
NE
WV
MI
KY
OH
MA
UT
MO
MN
NV
DC
NM
NH
IN
HI
ND
LA
WI
CA
WA
KS
GU
AK
CO
OR
MP
YoY DPW Change by State
YoY change Average
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [17]
During 2021, 25.5 million policies were issued, a 20.2%
increase over 2020. Residential policies increased 21.1%
to 24.1 million while non-residential policies increased
7.4% to 1.4 million. Residential policies accounted for
$21.4 million (81.1%) of the $26.4 million in DPW, or an
average of $887 per residential policy. Non-residential
policies averaged $3,540 per policy. This was an average
YoY increase of 11.7% per residential policy and 29.1% per
non-residential policy.
Collectively, the industry recorded $1,004 per policy in
premiums earned, direct losses and allocated LAE incurred
of $19 per policy, and $18 per policy in taxes, licenses, and
fees. These values were similar to 2020’s results of $898 in
net premiums earned, $23 in expenses paid, and $15 in
taxes per policy. While polices issued directly had a net
premium earned per policy ($1294) that was 24.5% higher
than those issued by non-affiliated agencies ($1040) or
53.6% higher than those from affiliated agencies ($843),
the expenses paid and incurred ($106) were 210.7% ($34)
and 302.8% ($26) higher, respectively.
Profitability
Net income for the industry totaled $2.5 billion, a 44.6%
increase over 2020 and the fourth year in a row of double-
digit net income growth driven by strong operating
performance. Operating income increased 22.2% to $27.6
billion. Net operating gains increased 48.5% compared to
2020 to $2.7 billion, more than double the operating gains
in 2019. Premiums earned grew faster than expenses in
three of past five years, assisted by a decrease in 2021 in
losses and LAE expenses incurred. The title industry
recorded net operating gains for ten years in a row, with
YoY growth increasing each year. This was the fifth
consecutive year in which operating gains have increased
as a percentage of operating income.
Net investment gains increased 23.8% over 2020 to $427 million, above both the five- and ten-year averages and equal
to the three-year average. Net investment income earned decreased from $385 million to $330 million, a five-year low
while net realized gains increased to $97 million, the second highest in five years. This was the first time in the past ten
years that net investment gains fell below 20% of net income, continuing the trend of operating income dominating
net income that started in 2018.
The combined ratio improved 2.7 points over 2020 to 94.9%, the third year in a row below 100%. Improvements
happened in both the net loss ratio (down 0.6 points to 2.3%) and the expense ratio (down 2.0 points to 92.6%). This
was the fifth year in a row the combined ratio improved.
11.6 M
10.8 M
12.4 M
19.9 M
24.1 M
1.0 M
1.0 M
1.3 M
1.3 M
1.4 M
$964
$1,023
$961
$794
$887
$3,476
$3,701
$3,078
$2,741
$3,541
-
5.0 M
10.0 M
15.0 M
20.0 M
25.0 M
30.0 M
2017 2018 2019 2020 2021
Policy Count and Average DPW / Policy
Non-Residential Policies Residential Policies
Avg Residential DPW Avg Non-Residential DPW
$1,015 M
$1,230 M
$1,391 M
$1,713 M
$2,476 M
100.8%
100.4%
99.5%
97.6%
94.9%
$0 M
$500 M
$1,000 M
$1,500 M
$2,000 M
$2,500 M
2017 2018 2019 2020 2021
Five Years of Net Income ($M) and the
Combined Ratio
Net Income Combined Ratio
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [18]
Capital & Surplus
Policyholder Surplus (PHS) increased 14.5% since 2020 to
$7.1 billion as of December 31, 2021, more than double the
PHS as of December 31, 2012. The 2021 increase was
dominated by net income, offset by $1.7 billion in dividends
paid. Net unrealized capital gains, the second largest
contributor to the gain, decreased 23.0% to $179.2 million,
but still exceeded the sum of all other non-dividend PHS
deductions by $53.3 million. Return on surplus increased
8.3 points to 37.1%, the highest since 2014.
Cash & Liquidity
Net cash from operations increased for the seventh
consecutive year to $3.3 billion or 52.9% over 2020. This
was the largest YoY increase in the previous ten years.
Premiums collected net of reinsurance were up 36.2%,
which drove cash from operations inflows up 34.7%.
Commissions, expenses paid, and aggregate write-ins for
deductions (95.3% of all operation outflows) increased
32.7% while federal and foreign income taxes paid, the
second largest at 2.7% of cash from operations outflows,
increased 67.2%.
Net cash from investments totaled -$925.3 million, driven by increased investments in bonds (up $529.9 million) and
stocks (up $557.6 million). Other invested assets decreased $88.3 million in 2021, largely offsetting the $104.9 million
gain seen in 2020. Net cash from financing and miscellaneous sources totaled -$1.8 billion, largely driven by the $1.7
billion in dividends mentioned above.
The net change in cash was $569.6 million, an increase of 155.4% over 2020 to $2.5 billion in cash, cash equivalents,
and short-term investments as of December 31, 2021. The industry’s liquidity ratio improved 2.1 points to 65.0%, the
third year in a row of improvement. Liquid assets increased 19.7% over 2020, while adjusted liabilities only increased
15.9%.
$1,193
$1,441
$1,560
$2,145
$3,280
$34
($214)
($170)
($437)
($925)
($1,201)
($1,003)
($1,067)
($1,486)
($1,785)
$25
$225
$323
$223
$570
68.6%
66.9%
68.9%
67.1%
65.0%
($2,000)M
($1,000)M
$0 M
$1,000 M
$2,000 M
$3,000 M
$4,000 M
2017 2018 2019 2020 2021
Cash Flows ($M) and Liquidity Ratio
Cash From Operations Cash from Investments Cash from Finance Net Cash Liquidity Ratio
$4,818 M $4,909 M $5,664 M $6,229 M $7,135 M
21.1%
25.1%
24.6%
27.5%
34.7%
$0.0 B
$1.0 B
$2.0 B
$3.0 B
$4.0 B
$5.0 B
$6.0 B
$7.0 B
$8.0 B
2017 2018 2019 2020 2021
PHS and Return on Surplus
PHS Return on Surplus
U.S. Property & Casualty and Title Insurance Industries – 2021 Full Year Results
© 2022 National Association of Insurance Commissioners [19]
NAIC Financial Regulatory Services
Financial Analysis and Examination Department
Contributors:
Brian Briggs, Senior Financial Analyst
816-783-8925
Topher Hughes, Financial Analyst
816-783-8125
Contacts:
Bruce Jenson, Assistant Director - Solvency Monitoring
816-783-8348
Andy Daleo, Senior Financial Analysis Manager
816-783-8141
Rodney Good, Property/Casualty & Title Financial Analysis Manager
816-783-8430
DISCLAIMER: The NAIC 2021 Annual Report on the U.S. Property & Casualty and Title Insurance Industries is a limited scope analysis based on
the aggregated information filed to the NAIC’s Financial Data Repository as of December 31, 2021, and written by the Financial Regulatory
Services Department staff. This report does not constitute the official opinion or views of the NAIC membership or any particular state insurance
department.
