P&C insurers Q2 results highlight fixed income

Fixed income investments deliver for insurers as market recalibrates after CAT losses and continued volatility.

AIG was one of the P&C insurer's that benefitted from higher fixed maturity income.

North American Property & Casualty (P&C) insurers have been releasing bumper Q2 results, even though many of them suffered painful catastrophe (CAT) losses during the quarter. However, most saw an increase compared to the previous year, Q2 2022. 

Investment income has propped up some companies, particularly for those heavily allocated to fixed income, as some underwriting results have suffered from market volatility and national CAT events. 

Companies such as Allstate have bounced back after less than stellar Q1 results, whilst other have seen their CAT losses remain at higher rates with additional losses in Q2.

Unlike in previous quarters there has not been the discrepancy between smaller/specialist P&C carriers suffering from CAT events or other factors that single-handedly derailed their underwriting earnings and the larger carriers with more diversified portfolios that were far less affected. 

Below is a quick rundown of several North American P&C insurers. 

The Hartford 

The Hartford, one of the US’s largest P&C insurers, has announced a net investment income of $540 million before taxes. 

The number is compared with the $541 million from the second quarter in 2022 – with the slight fall being due to a decrease in income from limited partnerships and other alternative investments (LPs), offset by higher yields on the company’s fixed income portfolio.

"Our investment performance remains strong."

The Hartford is so far almost alone in seeing a fall in its investment revenue when compared to 2022 in the announcement of Q2 results. 

“Our investment performance remains strong. We are actively managing our capital and, in the second quarter, returned $484 million to shareholders through repurchases and dividends,” said The Hartford's Chief Financial Officer (CFO) Beth Costello. 

The company’s total invested assets sat at $52.7 billion, which was a slight increase from 31 December 2022, primarily due to an increase in fixed maturities, available-for-sale, at fair value, and LPs – partially offset by a decrease in equity securities, at fair value, and short-term investments, the company said. 


Conversely, one of The Hartford’s competitors in the US P&C market, Allstate, announced a loss for Q2, which was offset by some positive investment returns. 

The company’s net investment income was at $610 million – compared to $562 million for the same time last year, a rise of 8.5%. It was also a rise of 2.5% for H1 2023’s investment income compared to the same period in 2022. 

Allstate’s fortunes have been mixed in recent quarters. 

Its statement said it benefitted from higher fixed-income investment yields and balances. “Fixed income earned yield increased from 2.8% in second quarter 2022 to 3.6% in 2023. Duration extension locks-in higher yields for longer.” 

It added that, “net investment income benefits from higher reinvestment yields with performance-based income below prior year,” and “increased market-based income reflects higher yields and portfolio repositioning”. 

Overall, revenues increased $1.76 billion primarily due to higher Property-Liability earned premiums from 2022 and 2023 rate increases. “[The] underwriting loss in the second quarter reflects elevated catastrophe losses and increased loss costs in auto insurance,” said the company’s statement. 

Cincinnati Financial Corporation 

Cincinnati Financial Corporation said its Q2 net income was $534 million, compared with a net loss of $818 million in the second quarter of 2022, “after recognising a $363 million second-quarter 2023 after-tax increase in the fair value of equity securities still held”. 

The company had a $1.352 billion increase in Q2 net income, compared with second-quarter 2022, reflecting the after-tax net effect of a $1.255 billion increase in net investment gains and a $78 million increase in after-tax property casualty underwriting income.

"Higher underwriting profits drove most of the improvement, supported by
a 13% rise in income from our investment portfolio."

It also said it had a 13%, or $25 million, increase in Q2 pre-tax investment income – including a 19% increase for bond interest income and a 3% decrease for stock portfolio dividends. It had a “three-month increase of 3% in fair value of total investments at 30 June 2023, including a 2% increase for the bond portfolio and a 5% increase for the stock portfolio”. 

There was also $4.518 billion parent company cash and marketable securities at 30 June 2023, up 8% from year-end 2022. 

“Non-generally-accepted-accounting-principles (GAAP) operating income more than doubled compared with last year's second quarter result,” said Steven Johnston, Chair and CEO. “Higher insurance underwriting profits drove most of the improvement, supported by a 13% rise in income from our investment portfolio. Cash and invested assets reached $24.6 billion, reflecting higher valuations and new securities purchased with the healthy cash flow from our insurance operations.” 

Universal Holdings 

Florida-based Universal Holdings said its revenue was $339.6 million, which was up 16.3% from the prior year quarter and core revenue was $337 million, which was up 11.7% from the prior year quarter.

Universal consist of subsidiaries Universal Property and Casualty Insurance Company (UPCIC) and American Platinum Property and Casualty Insurance Company (APPCIC). 

“The increase in core revenue primarily stems from higher net premiums earned, net investment income and commission revenue,” it said. 

Its net investment income was $11.3 million, up from $5.2 million in the prior year quarter. The increase primarily stems from higher fixed income reinvestment yields and higher yields on cash. 

CNA Financial 

Chicago-based business P&C insurer, CNA Financial, said its P&C core income was $374 million, compared to $317 million in the prior year quarter. 

“[This] reflects higher investment income and record high pre-tax underlying underwriting income, partially offset by higher catastrophe losses and lower favourable net prior year development,” said its statement. 

Net investment income increased by 33% to $575 million pre-tax, it said – which included an $83 million increase from limited partnerships and common stock to $68 million, and a $60 million increase from fixed income securities and other investments to $507 million. 

Overall, its second quarter 2023 net income was $283 million – compared to $190 million in the prior year quarter. Net investment losses for the quarter were $25 million, whereas they were $40 million in the same quarter the prior year.

Kinsale Group 

Kinsale Group said that its net investment income increased by 128.2% compared to the second quarter of 2022 – to $24.2 million. 

The Virginia-based surplus line insurer said in its statement that its net investment income was $24.2 million in the second quarter of 2023 compared to $10.6 million in the second quarter of 2022. Net investment income was $44.9 million in the first half of 2023 compared to $19.7 million in the first half of 2022, an increase of 128%. 

"The company’s investment portfolio had an annualised gross investment
return of 3.8% for the first half of 2023."

“These increases were driven by growth in the company's investment portfolio generated largely from the investment of strong operating cash flows and higher interest rates relative to the prior year periods,” it said. “Net operating cash flows were $423.6 million in the first half of 2023 compared to $278.7 million in the first half of 2022, an increase of 52%. The company’s investment portfolio had an annualised gross investment return of 3.8% for the first half of 2023 compared to 2.6% for the same period last year.” 

It also said that funds were generally invested conservatively in high quality securities with an average credit quality of AA- and the weighted average duration of the fixed-maturity investment portfolio, including cash equivalents, was 3.1 years and 3.5 years at 30 June 2023 and 31 December 2022, respectively. Cash and invested assets totalled $2.6 billion at 30 June 2023 and $2.2 billion at 31 December 2022. 

Overall, its net income increased by 168.7% compared to the second quarter of 2022. 


For AIG, one of the world’s biggest insurers, total consolidated net investment income for the second quarter of 2023 was $3.6 billion – an increase of 37% from $2.6 billion in the prior year quarter, benefiting from higher income from fixed maturity securities and loan portfolios due to the higher reinvestment rates on new investments and floating rate securities.

“Total net investment income on an adjusted pre-tax income (APTI) basis was $3.3 billion, an increase of $774 million from the prior year quarter,” said its statement. 

General Insurance net premiums written grew 10% compared to the same period in 2022.