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P/C Insurers Bottom Line Improved in First-Half 2013 on Stronger Underwriting

Private U.S. property/casualty insurers’ net income after taxes rose to $24.5 billion in first-half 2013 from $17.2 billion in first-half 2012, with insurers’ overall profitability as measured by their annualized rate of return on average policyholders’ surplus increasing to 8.2 percent from 6.1 percent...
October 9, 2013

Private U.S. property/casualty insurers’ net income after taxes rose to $24.5 billion in first-half 2013 from $17.2 billion in first-half 2012, with insurers’ overall profitability as measured by their annualized rate of return on average policyholders’ surplus increasing to 8.2 percent from 6.1 percent. The figures were compiled in a report by the Insurance Services Office (ISO) and the Property Casualty Insurers Association of America (PCI).

Insurers’ pretax operating income — the sum of net gains or losses on underwriting, net investment income and miscellaneous other income — grew to $25.8 billion in first-half 2013 from $19.2 billion in first-half 2012. The increases in insurers’ pretax operating income, net income after taxes and overall rate of return were driven by an $8.7 billion swing to $2.3 billion in net gains on underwriting in first-half 2013. The combined ratio — a key measure of losses and other underwriting expenses per dollar of premium — improved to 97.9 percent for first-half 2013 from 101.9 percent for first-half 2012. The swing to net gains on underwriting in first-half 2013 reflects premium growth and a decline in loss and loss adjustment expenses.

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