January 11, 2010 by Canadian Underwriter
The net income of U.S. private property and casualty insurers after taxes rose to $16.2 billion through nine-months 2009, according to the Insurance Services Office (ISO) and the Property Casualty Insurers Association of America (PCI).
This represents a partial recovery from the 91.2% decline from $49.6 billion through nine-months 2007 to $4.4 billion through nine months 2008.
Insurers’ overall profitability, as measured by their annualized rate of return (ROR) on average policyholders’ surplus, increased to 4.5% in the first nine months of 2009. The annual ROR fell to 1.2% in the first nine months of 2008 from 13.1% in the first nine months of 2007.
Driving the increases in insurers’ net income and rate of return, net losses on underwriting fell by $16.6 billion — from $19.8 billion through nine-months 2008 to $3.2 billion through nine-months 2009.
ISO and PCI said the drop in underwriting losses was explained partly by the $26.5-billion drop in claims costs over the same period.
The combined ratio improved to 100.7% in the first nine months of this year from 105.5% in the first nine months of 2008.
The combined ration would have increased 3.5 percentage points, instead of dropping by 4.8 percentage points, if not for the decline in claims costs.