Tough Q1 for U.S. P&C Insurers: ISO

Terri Goveia | June 30, 2009

Private P&C insurers in the U.S. saw their net worth slide during the first quarter of 2009.  says the Insurance Services Office (ISO). Its quarterly industry assessment reveals that insurers ended the first three months of the year with a net loss of $1.3 billion (US) after taxes.

Though the industry “remains well capitalized” with contingency funds of just under $1.2 trillion (US), key measures show that it endured a rough quarter: the combined ratio deteriorated to 102.2% during the period, policyholders’ surplus fell to $437.1 billion (US), down  from $456.1 billion (US) at the end of 2008; and investment losses-- including the $1.3 billion net loss (US) after taxes, and $16.4 billion (US) in unrealized capital losses on investments--make it “the worst first-quarter results on record,” said Michael R. Murray, the ISO’s assistant vice president for financial analysis. Net investment gains also fell—by 69% compared to the same period in 2008--to  $3.7 billion (US). The ISO released its Q1 analysis June 29.

Net written premiums for the quarter dropped by 3.6%, to $106.4 billion (US), while net earned premiums were down 2.2%, to $105.6 billion, compared to the first quarter of 2008. Before this year, the record low for first-quarter premium growth was the negative 0.8%, Murray explained in an ISO statement, citing dwindling demand and lower prices for commercial insurance for the dip in premiums.

Though catastrophe losses were down compared to 2008-- ISO’s Property Claim Services unit reports that Q1 catastrophes caused $2.9 billion in direct insured losses to property, down 17.1% from $3.5 billion for the same period in 2008— the $2.9 billion (US)  in direct losses represents “more than one and half times the $1.7 billion average for all first quarters during the ten years from 2000 to 2009,” according to the ISO’s analysis.