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$1 Trillion Surplus

Updated: Jun 1

In 2021, according to A.M. Best, the U.S. property & casualty industry grew its surplus to exceed $1 trillion for the first time. That seems like quite a bell weather moment and yet I have not seen any huge headlines touting this landmark achievement.

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Now, not all carriers grew their surplus. The insurance industry is an industry of carriers that have plenty of surplus and carriers that really do not have enough from a perspective of a "going concern having much of a future perspective." One carrier by itself possesses about 25% of the entire industry's surplus according to the A.M. Best numbers. The rich get richer and the not so well run...


The headlines that I do see often advertise $100 million in losses, or even a cat causing a $1 billion loss, or even the $3 billion in anticipated aviation losses from the war in Ukraine (those losses are at least partially international). $1 billion is a lot of money, but $1 billion relative to $1 trillion is a little tiny drop in the bucket.


Policyholder surplus grew $100 billion last year. $1 billion in losses is only 1% of the surplus growth!


$1 billion in losses is only 0.1% of all surplus, just in the U.S alone. $1 billion is a rounding error.

If you hear of a carrier whining about surplus issues, keep these numbers in mind.

 

NOTE: The information provided herein is intended for educational and informational purposes only and it represents only the views of the authors. It is not a recommendation that a particular course of action be followed. Burand & Associates, LLC and Chris Burand assume, and will have, no responsibility for liability or damage which may result from the use of any of this information.


None of the materials in this article should be construed as offering legal advice, and the specific advice of legal counsel is recommended before acting on any matter discussed in this article. Regulated individuals/entities should also ensure that they comply with all applicable laws, rules, and regulations.

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