Insurers Post First Und. Profit Since 1978
The property-casualty industry reported its first underwriting profit in decades last yearposting a combined ratio of 97.9, compared to just over 100 in 2003according to initial, unconsolidated 2004 U.S. regulatory filings published by National Underwriter Insurance Data Services.
NUIDSformerly Thomson Financial Insurance Solutions and Sheshunoff Information Servicesis part of Highline Data LLC, the data affiliate of Highline Media, parent company of this magazine.
In December, when the Jersey City-based Insurance Services Office published nine-month 2004 results that included a combined ratio of 97.9, analysts widely predicted the full-year combined ratio would come in under 100 as well. The 2004 underwriting profit would be the first since 1978, the New York-based Insurance Information Institute reported at the time.
Net income after taxes for full-year 2004 rose 33 percent to $42 billion, up from $32 billion in 2003, NUIDS said. Surplus grew 13 percent to nearly $500 billion.
NUIDS reported these results based on regulatory filings of 2,552 individual companies95 percent of the total number of individual expected filersincluding 98 of the top 100 insurers ranked by net written premium volume.
For the top 25 insurance groups that have already filed annual statements, net income climbed 24 percent, with only nine of the 25 groups reporting income declines.
For several groups that reported large income declines and higher (worse) combined ratios in 2004including the U.S. businesses of Switzerlands Zurich Group and St. Paul Travelersreserve strengthening was a key issue. On the other hand, CNA and Hartford reported large income gains and significantly improved combined ratios, representing recoveries from reserve changes taken in 2003.
Net written premiums grew roughly 6 percent for the top 25 groups, with only three groups reporting premium drops. In spite of softening market conditions, four insurance groupsAmerican International Group, Progressive, Safeco and W.R. Berkleymanaged to record double-digit premium jumps for 2004.
Two insurance groups that ranked in the top 25 in 2003the U.S. operations of Bermuda-based ACE Ltd. and Wellpoint, an accident and health groupare among the late filers not yet included in the totals of the accompanying chart. Late-filer results may push the overall industry combined ratio slightly above 98, but not close to 100.
Results of four large members of the ACE Ltd. group that NUIDS was able to obtain are shown for informational purposes.
For each of the top groups summarized on the accompanying chart, results for both 2004 and 2003 include those for current members, including those acquired in 2004.
Reproduced from National Underwriter Edition, March 25, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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