Weak pricing and significantly higher catastrophe-related losses contributed to Fitch Ratings recent evaluation of the P&C universe. According to the ratings firms new report, flat or reduced premiumsin many casesand poorer underwriting results in 2008, contributed to the tumbling net profits of the U.S. property/casualty insurance industry. Nonetheless, the large majority of insurers in the group reported an underwriting profit for the year.
In a the report, Fitch evaluates full year 2008 industry performance based on a compilation of GAAP earnings release and 10-K filing data from 49 property/casualty insurance organizations.
While operating performance was expected to decline from the strong results of 2006 and 2007 due to more traditional competitive pressures, the impact of the sharp deterioration in economic conditions and investment markets overwhelmed these concerns.
Operating profits for the group, declined considerably for the year. However, a number of market participants reported reasonable operating returns on capital. When investment losses are considered, a larger percentage of insurers reported unfavorable returns or net losses, as well as declines in GAAP shareholders' equity for the full year, according to Fitch.
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