Industry Saw Profits Rise Through First Three Quarters of Year

December 21, 2010

Property casualty insurers had a healthy growth level in after-tax profits, which stood at $26.7 billion through the first nine months of 2010, according to a release by the Property Casualty Insurers Association of America (PCI), Insurance Information Institute (III) and the Insurance Services Office (ISO).

Those after-tax margins were up $10.3 billion from the $16.4 billion in after-tax profits the property casualty insurers saw in the first three months of 2009.

The groups also said that insurers’ annualized rate of return on average policyholders’ surplus — a key measure of overall profitability — increased to 6.7 percent from 4.6 percent.

For the third quarter, net income after taxes fell to $10.1 billion, down 3.2 percent from the $10.5 billion in after-tax profits insurers saw in the third quarter of 2009.

Investment gains help increase profits in 2010. Insurers saw investment gains of $39.5 billion in the first three quarters of the year, up from $26.3 billion in the year-ago period.

There are several growing areas of concern in insurers balance sheets for the first nine months of the year. Net losses on underwriting roughly doubled to $6.2 billion, up from $3.2 billion paid out in the same period of 2009.

Combined ratios were worse, too. The industry’s average combined ratio was 101.2 in the first nine months of the year — slightly worse than the 100.7 seen in the first three quarters of 2009.

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