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P/C Insurers Profits Margins Decreasing, But They're Still in the Black

After-tax profits for the U.S. property and casualty industry through the first nine months of the year were $4.1 billion -- a 91.8 percent decline...
December 23, 2008

After-tax profits for the U.S. property and casualty industry through the first nine months of the year were $4.1 billion -- a 91.8 percent decline from the $50 billion in profits earned the same period a year ago, according to ISO and the Property Casualty Insurers of America (PCI).

Insurers suffered $19.9 billion in net losses on underwriting through the first nine months of 2008, marking a $38.2 billion adverse swing from insurers' $18.4 billion in net gains on underwriting seen in the comparable 2007 period. The combined ratio - a key measure of losses and other underwriting expenses per dollar of premium, worsened to 105.6 percent in the first nine months of the year, down from the 93.8 percent combined ration the industry saw in the first nine months of 2007.

"That insurers remained profitable through nine-months 2008 despite multiple challenges is both a testament to their risk management and a sign that the property/casualty insurance industry remains well able to fulfill its obligations to policyholders," said David Sampson, PCI president and chief executive officer.

"Unlike the once iconic Wall Street institutions and banks brought down by the financial crisis, property/casualty insurers' conservative investment practices and modest financial leverage have thus far assured that insurers have ample resources to pay claims," Sampson said. "Effective state solvency regulation and the state insurance guaranty fund system are two more reasons that consumers and policymakers can rest assured that insurance remains a strong and stable cornerstone of the economy."

Industry Profits Dove Massively (Insurance Journal 12/16/08)

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