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Lack of Hurricanes Bolsters P/C Earnings

This was supposed to be another bad hurricane season, like last year. But five weeks before the end of the hurricane season on November 30,...
October 24, 2006

This was supposed to be another bad hurricane season, like last year. But five weeks before the end of the hurricane season on November 30, no hurricanes have made landfall in the United States. As a result, the nation's property/casualty insurers are expected to report significant increases in their earnings for the third quarter, especially compared with the same quarter last year when insurers had to make large payouts as a result of Hurricanes Katrina and Rita. 

On October 18 Allstate reported third-quarter profit of $1.16 billion, compared with a loss of $1.55 billion posted for the same quarter last year.  The Insurance Information Institute estimates that net income reported by U.S. property/casualty insurers for the third quarter will total from $13 billion to $15 billion and $55 billion to $60 billion for the year, setting a new record.  The industry's net income for the first six months of this year totaled $28.3 billion.  Last year's $43 billion in total net income also set a new record. 

In last year's third quarter, claims payments made by U.S. insurers totaled more than the premiums for both homeowners and commercial policies, primarily because of the hurricanes.  Rates for property insurance along the coast increased sharply this year while insured losses from catastrophes could drop to their lowest level since 2002 at the end of the current hurricane season on November 30. According to the Insurance Services Office (ISO), the year's catastrophe losses totaled $6.2 billion as of September 30, compared with $61.8 billion for all of last year.

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