The dog days of summer definitely have arrived for the property/casualty market. A day after Conning Research and Consulting released a report stating that mixed insurance premium pricing momentum and modestly deteriorating underwriting results will conspire to keep the P&C market in its current malaise, A.M. Best published a report that dovetails with Conning's assertions.
According to the A.M. Best report, the U.S. property/casualty industry's net income plummeted approximately 87% to $1.2 billion in the first quarter of 2009, due to challenging underwriting and investment markets. The year-over-year decline in earnings was principally due to the protracted turmoil in the financial markets, and the related impact on the P&C industry's net investment income and realized capital losses.
The following results are for Q1 2009, year-over-year:
- Net premiums written fell $4.2 billion, or 3.8%, to $107.6 billion from $111.8 billion
- The industry recorded an underwriting loss of $0.8 billion, driven by continued rate pressure, lower top-line growth, weather-related losses and the impact of significant losses reported by mortgage and financial guaranty insurers
- The combined ratio rose to 100.5 from 99.8.
- The mortgage and financial guaranty segments reported an underwriting loss of $1.9 billion, and posted a combined ratio of 220.8, adding approximately two percentage points to the industry's combined ratio
- Net investment gains fell $8.7 billion to $4.4 billion, down from $13.1 billion.
- The personal lines segment's underwriting results deteriorated, with a reported calendar year combined ratio of 100.7, up from 98.4
- The commercial lines segment's combined ratio improved modestly to 101.2, compared with 102.1
- The U.S. reinsurance segment posted a healthy combined ratio of 94.3, compared with 92.9
- The industry's policyholder surplus declined $82.0 billion, or 15.5%, to $447.2 billion for the 12 months ended March 31, 2009
- The annualized after-tax return on equity fell to 0.2% for the 12 months ended March 31, 2009, down from 1.8% for the 12 months ended March 31, 2008
A.M. Best added that 2009 is shaping up to be another challenging year for the U.S. property/casualty industry, and the unfavorable economic, investment and underwriting environments are expected to continue straining underwriting and operating results throughout the remainder of the year.
Register or login for access to this item and much more
All Digital Insurance content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access