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U.S. P/C Industry Posts First-Quarter Profit Despite Surge in Catastrophes, A.M. Best Says

Source: Business Wire

Posted on 13 Jul 2010

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The U.S. property/casualty industry benefited from the continued recovery in the financial markets to post a net profit for first-quarter 2010, rebounding from a net loss in the first three months of 2009, according to an A.M. Best Special Report. After-tax net income was $11.5 billion through the three months ended March 31, 2010, compared with a net loss of $0.9 billion reported during the same prior-year period. The improvement was driven largely by the industry reporting $2.9 billion in realized capital gains in first-quarter 2010, compared with $7.9 billion in realized capital losses during the same period in 2009.

  • The U.S. property/casualty industry’s net premiums written receded for an unprecedented 10th consecutive quarter, falling 1.2% to $105.8 billion through first-quarter 2010, amid sustained competitive market conditions in most commercial lines, weak exposure growth, excess capacity and growth in alternative forms of risk transfer.
  • The industry’s combined ratio improved by 1.2 points to 101.0 in the three months ended March 31, 2010, primarily reflecting favorable reserve development on prior accident years and significant but reduced losses in the mortgage and financial guaranty segments.
  • Improved underwriting and investment results, along with a significant capital contribution in the U.S. reinsurance segment, drove the U.S. property/casualty industry’s policyholders’ surplus up by 24.4% to $545.5 billion for the 12 months ended March 31, 2010.
  • Overall profitability measures improved, with the industry’s after-tax return on equity at 2.3% for the 12 months ended March 31, 2010, up from -0.2% for the 12 months ended March 31, 2009.