Tight Six Months for P&C Industry: ISO

The pressure is still on U.S. P&C insurers, whose net income fell by 59% during the first six months of 2009, according to the Insurance Services Office (ISO).

Poor investment returns drove net income down to $5.8 billion (US), and halved insurers’ net investment gains to $12.4 billion (US) for the period, down from  $24.9 billion (US) in 2008, the ISO and the Property Casualty Insurers Association of America (PCI) reveal in their mid-year report.

However, insurers gained some ground on net losses, which fell from $5.6 billion in the first half of 2008 to $2.2 billion this year. The combined ratio and policyholders’ surplus also improved, with the combined ratio dropping to 100.9% from 102% for the same period last year, and policyholders’ surplus rising 1.2% to $463 billion (US).

They also saw improved underwriting results. Although premiums continue to fall—net premiums written dropped by 4.2% to $212.8 billion (US)—insurers saw a much smaller overall net loss for the first half of the year: they fell to $154 billion (US), while net catastrophe losses declined to $8.1 billion (US), down from $10.7 billion (US) in 2008.

“Written premiums have now declined versus year-ago levels for nine successive quarters,” said David Sampson, PCI president and chief executive officer, in a statement accompanying the results. He noted that the declines since second-quarter 2007 are a result of increasingly intense competition in many insurance markets and the recession that began in December 2007.

The recession continues to impact results. “With insurers competing with one another for shares of a shrinking economic pie, market surveys indicate the recession contributed to continued softening in commercial insurance markets,” noted Michael R. Murray, ISO’s assistant vice president for financial analysis, adding that a Council of Insurance Agents and Brokers’ second-quarter 2009 market survey shows commercial premium rates declining an average of 4.9 percent for all sizes of accounts.

This story was originally published by Canadian Insurance Top Broker.