Think back to 1978. Pete Rose of the Cincinnati Reds had his 3,000th major league hit. The first test tube baby was born. Poland's Karol Wojtyla became Pope John Paul II. Nearly 1,000 people committed suicide in Jonestown, Guyana. And Egypt and Israel signed the Camp David peace accord.In the same year, the P&C industry made its last profit from underwriting for 25 years. That's right: Not until last year did the industry's combined ratio again fall below 100-which means for more than two decades, P&C losses exceeded premium earnings (see "P&C Combined Ratio," page 21).
After several years of tightening their underwriting standards to more carefully scrutinize and price risk, in 2004 carriers actually profited on premium dollars. They did this, in part, because they had returned to underwriting discipline. They knew they couldn't count on their investment earnings, which had fallen along with the stock market.
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