NU Online News Service, June 14, 3:55 p.m. EDT
Chubb, FM Global and W.R. Berkley Corp. were the strongest financial performers over the last decade, according to a special report of U.S. property and casualty insurers by Fitch Ratings.
Fitch based its ranking on five measures of performance--underwriting margin, net profit margin, operating cash flow, return on surplus and internal capital formation--used to analyze the 25 largest market participants from 2000 to 2009.
Chubb finished within or very near the top five companies in each category. FM Global came in with the highest marks in underwriting margin, with about 23 percent.
Fitch said companies with the lowest underwriting margin for the decade--Munich Re America, CNA and Zurich North America--were those hardest hit by the soft market cycle to start the 10-year period.
Berkley finished with the best operating cash flow ratio.
The report calls the last decade a "volatile" one for the industry, noting that it began at the bottom of a soft market.
The p&c industry then went through a hard market from 2003 to 2007, and is now once again in a soft market "with no clear sign of a market bottom or a near-term material shift to a broad hardening in insurance premiums rates," Fitch said.
Insurers have dealt with three straight years of declining premium volume, driven by competition and economic conditions, Fitch said.
Nevertheless, Fitch said the industry "held its own over the last decade." The industry's aggregate net profit margin for the decade was 7.8 percent, Fitch said, while average annual return on surplus was 7.6 percent.
"Premium-to-surplus ratios and net leverage have steadily declined over time and are currently at historic lows," Fitch said.
Leverage decline is driven by the recognition of catastrophe risk and more stringent capital adequacy requirements by regulators and rating agencies, according to Fitch.
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