P/C INSURERS’ PROFITS DOUBLE FIRST THREE QUARTERS OF 2003:

March 22, 2004

Property and casualty insurers earned $22.9 billion during the first nine months of 2003, representing a $12.1 billion, or 112 percent, increase over the $10.8 billion profit reported during the same period in 2002, according to Weiss Ratings Inc. “Property and casualty insurers flourished due to higher premiums and increased investment gains over the past year,” said Melissa Gannon, vice president of Weiss Ratings Inc. “However, with policyholders beginning to see better renewal rates, the tide may be changing, and the true strength of the industry will be determined by its underwriting capabilities.” The impressive performance of P/C insurers was driven by a 76.5 percent improvement in underwriting results. By adhering to stricter underwriting standards and increasing premiums, the industry dramatically reduced its underwriting loss to $4 billion in the third quarter of 2003, compared to a $17.1 billion loss during the same period in 2002. Among the 2,212 property and casualty insurers reviewed by Weiss, four companies were upgraded, while 19 were downgraded. Notable upgrades include: Bond Safeguard Ins. Co. (Lombard, Ill.) from D+ to C-; Imperial Fire & Casualty Ins. Co. (Opelousas, La.) from D+ to C-. Notable downgrades include: Norcal Mutual Ins. Co. (San Francisco, Calif.) from B+ to B; Wawanesa Mutual Ins. Co. US (San Diego, Calif.) from B+ to B. The Weiss Safety Ratings are based on an analysis of a company’s risk-adjusted capital, reserve adequacy, profitability, liquidity and stability.

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