P/C Industry’s First-Half Net Income Plunges; Combined Ratio at 109.2 for 2000

September 14, 2000

The U.S. property/casualty industry’s net income after taxes dropped to $10 billion in this year’s first half, down 32.5 percent from $14.9 billion a year ago. The industry’s surplus fell $7.6 billion, or 2.3 percent, from year-end 1999 to $326.7 billion at June 30, according to Insurance Services Office and the National Association of Independent Insurers.

The $4.8 billion decline in net income after taxes in this year’s first half reflects a near doubling of the industry’s net loss on underwriting to $14.7 billion from $7.8 billion for first-half 1999.

The combined ratio deteriorated to 109.2 percent in the first half of this year, 4.4 percentage points worse than the 104.8 percent a year ago.

“The 109.2 percent combined ratio for the first half of this year is the worst underwriting result for the first half of any year since the 11.2 percent in 1994, when the Northridge earthquake struck southern California,” said John J. Kollar, ISO’s vice president for consulting and research.

“But, random swings in catastrophe losses can obscure underlying trends in fundamental underwriting results. Excluding catastrophe losses, the combined ratio for the first half of the year equals 10.7 percent, 6.1 percentage points worse than a year ago and the worth first-half combined ratio excluding catastrophic losses since the 107.2 percent in 1991,” said Diana Lee, the NAII’s vice president for research services.

The decline in the industry’s consolidated surplus from $334.3 billion at year-end 1999 to $326.7 billion at June 30, 2000 occurred despite $10 billion in net income after taxes and $1.4 billion in new funds paid in during this year’s first half. Factors contributing to the decline in surplus include $9.1 billion in unrealized capital losses, $6.3 billion in dividends to shareholders, and $3.6 billion in miscellaneous charges against surplus.

A detailed industry income statement for the first half of 2000 follows:

2000 Financial Results: First Half* ($ Billions)

Earned Premiums


Incurred Losses
(including loss adjustment expenses)




Policyholder Dividends


Underwriting Losses


Investment Income


Other Items


Operating Gain


Realized Capital Gains


Pre-tax Income




Net After-tax Income


Surplus (End of Period)


Combined Ratio


*Figures may not add to totals due to rounding. Calculations in text based on unrounded figures. Source: Insurance Services Office, National Association of Independent Insurers and the Insurance Information Institute.

Topics Profit Loss Excess Surplus Market Property Casualty

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