The industry’s performance measures are likely to remain under pressure for the remainder of 2011 because of a number of factors including: continued expectations for weak underwriting results due to elevated catastrophe-related losses through the third quarter; sustained challenging market conditions in the commercial lines segment; a sluggish economic recovery; relatively low investment yields; and volatility in the investment markets. In the first half of 2011:
• Catastrophe-related losses climbed to an estimated $27.0 billion, more than doubling the total reported for the first half of 2010, and already surpassing the year-end 2010 total. These losses contributed 12.8 points to the six-month 2011 combined ratio compared with 5.8 points during the same prior-year period.
• The industry’s investment performance improved modestly as insurers reported net investment gains of $28.7 billion, up from $27.6 billion during the first half of 2010.
• Policyholders’ surplus increased $1.9 billion, or 0.3%, to $556.2 billion, from $554.3 billion posted at year-end 2011, despite underwriting and operating results deteriorating sharply.
• Overall profitability measures remained relatively low, with the industry’s after-tax return on equity at 1.2%, down from 4.0% for the same period of 2010.
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