Deteriorating underwriting and investment results drove the U.S. property/casualty industry’s net income down by nearly 80% to $14 billion in 2008, according to A.M. Best. Although policyholders' surplus decreased an estimated 10% in 2008, excess capital absorbed much of the decrease, and the overall industry remains sufficiently capitalized to meet the current challenges in underwriting and the financial markets.

A.M. Best Co. estimates the industry will recognize nearly $11 billion of favorable loss-reserve development in 2008—even higher than the $9 billion recorded in 2007—thus further eroding the industry’s overall loss reserve position.

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