Premiums earned by the nation’s property and casualty insurers surged $27.8 billion, or 12 percent, during the first three quarters of 2002, to $258.7 billion from $230.9 billion during the same period in 2001, according to Weiss Ratings, Inc.
The jump in premiums propelled the industry’s profit to $10.8 billion during the first nine months of 2002, compared to an $814 million loss in the same period the previous year. Despite the overall increase in profits, 32 percent of companies lost money for the period. Insurers reporting the largest year-over-year increases in net premiums were:
“Increased premiums of this magnitude indicate that the underwriting cycle may be nearing its peak, which means that rate increases experienced for the past three years could start slowing down,” Melissa Gannon, vice president of Weiss Ratings, Inc., commented. “If, at the same time, investment losses continue to mount, companies may find themselves fighting to preserve financial stability.”
Property and casualty insurers suffered a $3.7 billion, or 54 percent, decline in capital gains during the first nine months of 2002, to $3.1 billion from $6.8 billion during the same period in 2001.
In analyzing the industry’s capital gains (profits earned from the sale of investments), Weiss found that five companies reported gains greater than $100 million, while one insurer, Hartford Fire Insurance Company, contributed $3.9 billion.
Excluding Hartford Fire’s gain, which represents profits on the exchange of shares in affiliated companies, property and casualty insurers lost $830.8 million on sales of investments, representing a $7.7 billion decline in capital gains.
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