Property/casualty returns to profitability despite decline in premiums

The property/casualty industry returned to profitability in 2010 despite continuing declines in written and earned premiums.

According to a study by Insurance Services Office and the Property Casualty Insurers Association of America, private property/casualty insurers' net income after taxes swung to positive $8.9 billion in the first quarter of 2010 from negative $1.3 billion in the first quarter of 2009. Insurers' overall profitability as measured by their annualized rate of return on average policyholders' surplus (or statutory net worth) increased to positive 6.7 percent for the first quarter of 2010 from negative 1.2 percent for the first quarter of 2009.

Net written premiums dropped $1.4 billion (1.3 percent) to $105.1 billion for the three months ending March 31, 2010, from $106.5 billion for the three months ending March 31, 2009. Net earned premiums declined $2.8 billion (2.7 percent) to $102.8 billion for the first quarter of 2010 from $105.6 billion for the first quarter of 2009.

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Powering the increases in the property/casualty industry's net income and overall rate of return, insurers' net investment gains -- the sum of net investment income and realized capital gains (or losses) on investments -- more than tripled, rising $8.8 billion to $12.6 billion through three months of 2010 from $3.7 billion through three months of 2009.

Also contributing to the turnaround in insurers' overall results, underwriting results improved in the first quarter of 2010 even though premiums continued declining. Net losses on underwriting fell by $0.8 billion, or 29.6 percent, to $1.8 billion through March 31, 2010, from $2.6 billion through March 31, 2009, as loss and loss adjustment expenses dropped $4.3 billion to $74.5 billion.

Read more at the WorkersComp Forum homepage.

August 16, 2010

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