2009 H1 brings mixed results for P&C industry: Fitch

Net earnings improved for many companies within the U.S. property and casualty industry despite declining investment losses, but deteriorating accident-year underwriting results and lower investment income pressured operating profits, reports Fitch.
Fitch’s Property/Casualty Insurers’ Mid-Year 2009 Results Review compiled mid-year GAAP 2009 financial results for Fitch Ratings’ universe of publicly traded (re)insurers.
The industry’s underwriting results deteriorated year-over-year, despite lower catastrophe losses and the continuing benefit of favourable loss reserve development, the report said.
But, the group still posted a relatively strong aggregate combined ratio of 94.1%, the report said.
The group’s aggregate annualized operating return on average equity (ROAE) was fairly weak at 6.7%, but still marked a modest improvement from 2008’s 4.8%, it added.
“Looking forward, the industry is anticipated to experience further growth in GAAP equity in the second half of 2009,” the report said.
“However, the market faces considerable earnings challenges, with pressure on premium revenue from the economic recession and competitive pricing conditions in most markets, likely higher accident-year loss ratios, reduced benefits from favourable reserve development, and continued less favourable investment earnings.”