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Industry Net Income Rises on Investment Gains, Personal Lines Results Improve

Source: A.M. Best

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Posted on 04 Jan 2011

Despite an ongoing challenging operating environment marked by competitive market conditions, elevated catastrophe losses, the economic downturn and historically low investment yields, the U.S. Property/Casualty (P/C) industry generated improved operating results, according to an A.M. Best special report.

The industry's net income improved to $29.9 billion for the nine months ended September 30, 2010, up from net income of $17.2 billion for the same period of 2009, driven primarily by realized capital gains. However, despite another quiet U.S. hurricane season, significant favorable prior year loss reserve development and improved results in the personal lines segment, the industry's underwriting performance deteriorated slightly compared with the same prior year period.

The industry's underwriting loss was offset by a more than 50% increase in net investment gains compared with the same period of 2009.
For the nine months ended September 30, 2010:

    •    Net premiums written increased 0.6% to $327.4 billion.
    •    The overall statutory combined ratio was 101.3, compared with 100.8 during the same prior year period.
    •    According to A.M. Best Co. data, net catastrophe related losses from severe weather events occurring in the first nine months totaled an estimated $16.1 billion, up from an estimated $12.9 billion from the same period of 2009.
    •    Favorable prior year loss reserve development shaved 3.5 percentage points off the calendar year combined ratio, compared with 3.1 percentage points during the same period in 2009.
    •    Net investment income fell 1.5% to $36.6 billion from $37.2 billion in the first nine months of 2009.
    •    The U.S. P/C industry's policyholders' surplus increased 11.1% to $558.8 billion from $503.1 billion posted through the same period of 2009.


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