Financial results for the U.S. P&C industry were significantly improving as of late October, compared with substantial underwriting losses in 2011, despite challenges posed by persistently low interest rates, according to “Catastrophes Drive Underwriting Loss in 2012; Better Results Expected in 2013,” from A.M. Best. As of Sept. 30, 2012, the industry achieved a “near break-even” combined ratio of 100.1, and net income more than twice the 2011 level.
Superstorm Sandy, which hit the east coast on Oct. 29, 2012, likely will become the second-costliest U.S. natural disaster in terms of insured losses; 2005’s Hurricane Katrina is remains the most costly. Sandy’s impact has been seen on income statements throughout the industry, as underwriting losses increased by $26 billion and net income dropped $10 billion during Q4, as per A.M. Best’s estimated results for the full year of 2012. CAT losses for 2012 declined slightly to $43.0 billion from $44.2 billion in 2011, A.M. Best said, and the surplus is projected to grow 1.5 percent to $575.8 billion in 2012. After-tax return on equity will decline to 3.6 percent from 4.7 percent in 2011, the company said.
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