P&C Market Up and Down

Although U.S. property/casualty (P&C) insurers saw an uptick in 2010 investments results, the industry continued to face significant hurdles throughout 2010, notes a new report by A.M. Best.

The report maintains that continued competitive market conditions, weak macroeconomic factors, elevated catastrophe-related losses and a low interest rate environment are a mainstay for insurers’ financial health going forward. 

The sector’s 2010 investment results enjoyed improved market valuations; however, those results were offset by underwriting results deteriorating rather sharply compared with those of 2009.

According to A.M. Best: 

• The industry’s net income increased approximately 12% to $44.1 billion for the year, compared with $39.5 billion for the year-ended Dec. 31, 2009

• Net premiums written grew 1.1%; the first increase the industry recorded since 2006 

• U.S. P&C insurers posted a statutory combined ratio of 100.8, compared with a combined ratio of 98.7 in 2009

• The U.S. P&C industry’s policyholder surplus position grew 9.0% to $560.1 billion from $513.8 billion in 2009, representing the highest level ever reached for the industry’s capital level

• The industry’s overall net investment gains increased about 34% to $56.7 billion from $42.4 billion in 2009

The rating firm expects more of the same in 2011, despite positive pricing across the personal lines segment and slowly improving economic conditions.

“Insurers will continue to face near-term challenges and should expect deteriorating underwriting results and lower investment returns,” notes the report. "As a result, the industry’s bottom line is projected to be under continued pressure in 2011."