P-C Sector Net Income Worst In Nearly A Decade, Says Highline

National Underwriter News
November 21, 2008
Posted Nov. 25, 2008


The property and casualty insurance industry is reeling from the largest year-over-year drop in net income in seven years, according to an analysis by Cambridge, Mass.-based Highline Data.

P-c third quarter net income was down 80.7 percent in the third quarter compared with the same period in 2007, said Highline, a subsidiary of Summit Business Media, the parent company of National Underwriter.

Losses from Hurricanes Gustav, Hanna, and Ike were called the main drivers of a "dramatic year-over-year decline, from $50.8 billion to $9.8 billion." Additionally, Highline said the industry-wide loss ratio rose to 77.9 percent from 76 percent in the third quarter of 2007.

The last time this industry suffered a comparable decline was in 2001, which was driven by natural disasters and September 11 losses, said Highline.

The "Highline Data 2008 Third Quarter Industry Analysis" also revealed a 876 percent drop in net unrealized capital gains (losses) for the life insurance industry, from a gain of $5.3 billion as of Sept. 30, 2007 to a loss of $40.8 billion on the most recent filings.

This year's precipitous decline in net unrealized capital gains (losses) was mostly a result of the stock market tumble and required capital infusions from parent companies to help reduce the decline in capital and surplus, which dropped 5.7 percent from year-end 2007, Highline noted.

The analysis also showed a number of other signs that the industry is suffering, including a near doubling of net losses for property and casualty insurers and a 26.7 percent decline in net gain from operations for life insurers.

Requests for the complete analysis can be made by calling 201-526-1252.

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