U.S. P&C industry reports declining ROE in 2007 Q1

The U.S. property and casualty insurance industry recorded a declining return on equity (ROE) in 2007 Q1, despite good underwriting results, according to information released by ISO and the Property Casualty Insurers Association of America (PCI).
During 2007 Q1, the U.S. property and casualty industry reported an ROE of 12.9%, down from 15.5% reported during 2006 Q1. The industry reported a 14% ROE for the calendar year of 2006.
The decline in profitability occurred despite the fact that the industry turned in one of its best underwriting performances ever, with a combined ratio [COR] of 91.7%, commented Dr. Robert P. Hartwig, the president and chief economist of the Insurance Information Institute.
The 2007 Q1 COR was down from the 92.4% COR reported for the full year of 2006, but up from the 91.1% 2006 Q1 COR.
Though profits remain reasonably strong, industry margins are virtually guaranteed to fall well short of those realized by the Fortune 500 group of companies, which is expected to turn in an average return on equity (ROE) in the 14 to 15%, Hartwig commented.
PCI is composed of more than 1,000 member companies, representing a broad cross-section of insurers of any national trade association.
PCI members write more than US$194 billion in annual premium, or 40.1% of the nations property/casualty insurance.