It’s common knowledge that the life insurance industry has taken it on the chin since the start of the economic crisis, with AIG, The Hartford and other carriers making headlines, but things aren’t rosy in the P&C sector, either.
The top 100 property/casualty insurers in the United States closed 2008 with the lowest net income levels in seven years, while the top 100 life insurers suffered unprecedented capital losses, according a new study by Highline Data, a division of Summit Business Media.
The Highline Data “2008 Top 100 Performance Monitor” revealed a 67.7% year-over-year drop in net income—from $48.8 billion to $15.8 billion—in 2008 across the industry's top property/casualty insurers. The last time property/casualty insurers reported annual net income drops this significant was in 2001 due to the losses from the September 11 attacks and multiple hurricanes.
Highline Data also highlighted a decline in unrealized capital gains/(losses) among the top 100 life insurers, from a gain in 2007 of $1.4 billion to a loss of $51.7 billion as of Dec. 31, 2008. Sharp drops drove this year-over-year decline in the life industry in stock values. Capital paid-in, however, held the surplus decline to 4.7%.
Additionally, the “Performance Monitor” found other alarming signs for the insurance industry going into 2009, including declines in surplus of 11.3% for P&C companies, and 4.7% for life insurers. Property/casualty companies also experienced a combined ratio increase from 94% in 2007 to 102% in 2008, whereas life companies reported a return on equity of -0.3% in 2008, which was a decline from 12.8% in 2007.
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