U.S. P/C Industry Posts $11.5B Net Income in Q1

July 13, 2010

The U.S. property/casualty industry earned a net profit for the first quarter 2010, partly due to the continued recovery in the financial markets. The first quarter 2010 rebounded from a net loss in the first three months of 2009.

After-tax net income was $11.5 billion through the three months ended March 31, 2010, compared with a net loss of $0.9 billion reported during the same prior-year period, according to A.M. Best’s Special Report “U.S. P/C Industry Posts First-Quarter Profit Despite Surge in Catastrophes.” The improvement was driven largely by the industry reporting $2.9 billion in realized capital gains in first-quarter 2010, compared with $7.9 billion in realized capital losses during the same period in 2009.

Highlights from the report include:

— The U.S. property/casualty industry’s net premiums written receded for an unprecedented 10th consecutive quarter, falling 1.2 percent to $105.8 billion through first-quarter 2010, amid sustained competitive market conditions in most commercial lines, weak exposure growth, excess capacity and growth in alternative forms of risk transfer.

— The industry’s combined ratio improved by 1.2 points to 101.0 in the three months ended March 31, 2010, primarily reflecting favorable reserve development on prior accident years and significant but reduced losses in the mortgage and financial guaranty segments.

— Improved underwriting and investment results, along with a significant capital contribution in the U.S. reinsurance segment, drove the U.S. property/casualty industry’s policyholders’ surplus up by 24.4 percent to $545.5 billion for the 12 months ended March 31, 2010.

— Overall profitability measures improved, with the industry’s after-tax return on equity at 2.3 percent for the 12 months ended March 31, 2010, up from -0.2 percent for the 12 months ended March 31, 2009.

Source: A.M. Best Company, www.ambest.com

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