The U.S. P&C industry experienced an underwriting loss of US$2.8 billion through September 2005, down from the US$13.3 billion profit resulting from the first six-months of 2005 , according to a recent study by A.M. Best Co. Although the insurance industry posted strong results for the first half of 2005, underwriting losses were experienced due to third-quarter U.S.-insured catastrophe losses, which contributed to an estimated total loss of US$31.7 billion through the first nine months of 2005. According to A.M. Best, this underwriting loss also represents a US$6.2 billion change of direction when compared with the results reported during the comparable period of 2004, when the industry turned a US$3.4 billion profit. “The 2005 hurricane season was the most active on record, with 19 named storms through the first nine months–most notably Katrina and Rita, with Katrina topping the list at an estimated $23.5 billion in U.S.-insured losses to date,” A.M. Best reports. “This compares with the first nine months of 2004, when there were 13 named storms and roughly $15 billion in insured catastrophe losses.” The Council of Insurance Agents & Brokers’ Commercial Market Index Survey notes that the P&C industry experienced the seventh consecutive quarter of rate reductions, with commercial accounts experiencing an average third-quarter premium decrease of 8.2%. A.M. Best data indicates that, as expected in a softening market, net premiums written for the entire industry decreased only 0.3% when compared with the nine-month period of 2004. The same data which reveals softening market conditions and significant insured catastrophe losses reveals that the P&C industry’s combined ratio increased 2 points to 99.9 through September 2005, up from the nine-month 2004 combined ratio of 97.9. A.M. Best notes that the current combined ratio is also up 6 points from the first six months of 2005, which, according to the ratings agency, “further illustrates the impact of the third-quarter hurricane losses and continuing trend in market conditions.” Financial performance may not be comparable to the sound results the industry experienced in 2004, and insurers may fall short of their target results for 2005, which A.M. Best says is a direct result of 2005’s hurricane losses and softening conditions.