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P/C Industry's 2009 Results Strong, But Recovery From Recession Not Complete

Private U.S. property/casualty insurers' net income after taxes rose to $28.3 billion in 2009 from $3 billion the year before, according to data compiled by...
April 20, 2010

Private U.S. property/casualty insurers' net income after taxes rose to $28.3 billion in 2009 from $3 billion the year before, according to data compiled by the Insurance Services Office (ISO). Insurers' overall profitability as measured by their rate of return on average policyholders' surplus (or statutory net worth) increased to 5.8 percent last year from 0.6 percent in 2008. But insurers' recovery from the recession and financial crisis remained incomplete, with their $28.3 billion in net income for 2009 being less than half of their $62.5 billion in net income for 2007.

Similarly, insurers' 5.8 percent overall rate of return for last year was less than half of their 12.4 percent rate of return for 2007. Driving the increases in insurers' net income and rate of return in 2009, net losses on underwriting fell by $18.1 billion to $3.1 billion in 2009 from $21.2 billion in 2008, as claim costs (loss and loss adjustment expenses) dropped $31.3 billion. Driven by the decline in claim costs, the combined ratio - a key measure of losses and other underwriting expenses per dollar of premium - improved to 101 percent in 2009 from 105 percent in 2008. Also contributing to the increases in insurers' profits and profitability, their net investment gains - the sum of net investment income and realized capital gains (or losses) on investments - rose 23.2 percent to $39 billion in 2009 from $31.7 billion in 2008.

Strong But Incomplete Recovery for P/C Sector (Insurance Information Institute 4/15/10)