U.S. property and casualty insurers in 2011 posted worst underwriting loss since 2002

The U.S. property and casualty industry experienced its largest underwriting loss in 2011 since 2002, reported A.M. Best.
Driven primarily by high catastrophe-related losses, alongside elevated losses in select and non-catastrophe-exposed lines, less favourable loss-reserve development and weak macroeconomic conditions, the industry’s combined ratio is expected to deteriorate 6.5 points to 107.5% for 2011 (down from 101% in 2010), A.M. Best said in a release.
The rating agency estimates total statutory accident-year, catastrophe-related losses (pre-tax) were approximately $44.1 billion in 2011, up from an estimated $19.6 billion paid in 2010.
“As a result, all three segments – personal lines, commercial lines and U.S. reinsurers – are expected to report relatively large underwriting losses, the industry’s policyholder’s surplus is expected to decline modestly and return measures are expected to remain in the low single digits,” the release said.
Policyholder surplus likely decreased by only 1.4%, to $562.7 billion, from its record year-end high of $570.4 billion reported in 2010, A.M. Best estimated.
While the majority of rating actions in 2011 resulted in affirmations, downgrades outnumbered upgrades for the first time since 2005.