U.S. P&C net income falls nearly 50%

The U.S. property and casualty industry’s net income fell 49.3% in 2008 Q1, from US$16.2 billion in 2007 Q1 to US$8.2 billion this year.
Reflecting the declines in net income, the P&C industry’s annualized rate of return on average policyholders’ surplus dropped to 6.4 % in 2008 Q1 (it was 13.2 % in the same quarter last year), according to ISO and the Property Casualty Insurers Association of America (PCI).
The industry posted US$600 million in net underwriting losses in 2008 Q1, an US$8.9-billion drop from the US$8.3 billion in gains posted in 2007 Q1.
“Insurers’ 6.4% annualized rate of return for first-quarter 2008 was the second-lowest first-quarter annualized rate of return in the past 23 years, and 4.5 percentage points below insurers’ 10.9% average first-quarter rate of return since the start of ISO’s quarterly data in 1986,” Michael R. Murray, ISO’s assistant vice president for financial analysis, said in the release.
“But results for the insurance industry overall were affected significantly by deterioration in results for mortgage and other financial guaranty insurers. ISO estimates that, excluding mortgage and other financial guarantee insurers, the insurance industry’s annualized rate of return on average surplus declined to 9.5% in first-quarter 2008 from 13.5% in first-quarter 2007, as the industry’s net income fell 24.2%.”
Net written premiums fell US$800 million, to US$110.5 billion in 2008 Q1 from US$111.3 billion in 2007 Q1.