Weiss Reports P/C Insurers Post $5.5B Profit in 1stQ 2002

September 24, 2002

The nation’s property and casualty insurers reported a $5.5 billion profit for the first three months of 2002, representing a $260 million, or 4.9 percent, increase over the same period last year, according to Weiss Ratings, Inc.

“Property and casualty insurers quickly reversed last year’s loss and seem positioned to return to profitable levels this year,” Melissa Gannon, vice president of Weiss Ratings, Inc., remarked “Years of strong earnings and frequent rate increases have allowed the industry to quickly absorb losses from catastrophic events.”

Market volatility during the first quarter contributed to a $2.4 billion, or 85.7 percent, decline in net realized capital gains, from $2.8 billion in 2001 to $400 million in 2002. The dismal market performance also caused the industry to suffer a $145 million drop in investment income compared to the same period last year.
However, investment income was high enough to offset underwriting losses of $3.3 billion.

The industry’s capital was up $11.2 billion, or 3.0 percent, to $378.5 billion at March 31, 2002 from $367.3 billion at March 31, 2001. A contributing factor was the increase in surplus notes, subordinated debt instruments included in statutory capital, which were up $2 billion, from $6.1 billion to $8.1 billion during the same period.
Among the 2,264 property and casualty insurers reviewed by Weiss, 16 were upgraded and 20 were downgraded.

The Weiss Safety Ratings are based on an analysis of a company’s risk-adjusted capital, reserve adequacy, profitability, liquidity, and stability. The latter category combines a series of factors including asset growth, premium growth, strength of affiliate companies, and risk diversification.

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