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.
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.
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