P&C Insurers Wincing

A.M. Best reports drastic drop-offs in industry-wide income and combined ratio when comparing the first three quarters of 2010 and 2011.

Insurance Networking News, December 23, 2011

Justin Stephani

With a net income decrease of over $20 billion and an increase in statutory combined ratio of over 8 percentage points based on year-to-year comparisons of the first nine months of 2010 and 2011, the P&C sector continues to weather a tumultuous storm. High natural catastrophe-related losses have devastated insurers bottom lines and decimated underwriting performance as a whole.

The industry’s net income dropped to $12.8 billion through the first nine months, compared to $33 billion for the same period last year. Meanwhile, on a year-to-year basis, the industry’s combined ratio jumped from 99.8 percent to 108.3 percent. According to A.M. Best’s report, the industry’s investment performance was impacted by the low interest-rate environment, volatility in the equity markets and widening credit spreads.

Personal, commercial and U.S. reinsurance lines reported significant underwriting losses. The industry as a whole, reported underwriting losses of $30 billion, compared to $2 billion from the same period in 2010.

The industry’s net premiums written increased 3.3 percent based on year-to-year comparisons, continuing top-line growth thanks to favorable pricing trends in the personal lines of business and a stabilizing pricing environment in commercial lines.

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