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P/C Industry's Net Income and Overall Profitability Rebound from Depressed Year-Ago Levels

Source: PCI

Posted on 23 Dec 2009

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Private U.S. property casualty insurers' net income after taxes rose to $16.2 billion through nine-months 2009, partially recovering from the 91.2 percent decline to $4.4 billion through nine-months 2008 from $49.6 billion through nine-months 2007. Insurers' overall profitability as measured by their annualized rate of return on average policyholders' surplus (or statutory net worth) increased to 4.5 percent in the first nine months of 2009, having previously fallen to 1.2 percent in the first nine months of 2008 from 13.1 percent in the first nine months of 2007.

Driving the increases in insurers’ net income and rate of return, net losses on underwriting fell by $16.6 billion to $3.2 billion through nine-months 2009 from $19.8 billion through nine-months 2008, as claim costs (loss and loss adjustment expenses) dropped $26.5 billion, according to ISO and the Property Casualty Insurers Association of America (PCI).

Third-Quarter Results

The industry’s consolidated net income after taxes for third-quarter 2009 amounted to $10.4 billion — a $20.2 billion swing from the industry’s $9.8 billion net loss after taxes for third-quarter 2008. Reflecting the increase in net income, property/casualty insurers’ annualized rate of return on average surplus rose to 8.7 percent in third-quarter 2009 from negative 7.9 percent a year earlier.