Read 'em and weep, folks! I couldn't help but cringe a bit as I reviewed the P&C insurance industry's consolidated results for the first three quarters of 2011. It was bad news galore. Even the few bits of “good” news had a negative tinge.
Let's start with the bottom line. Net income fell by over two-thirds, down from $27.1 billion in the first nine months of 2010 to a relatively paltry $8 billion last year. That sent the industry's rate of return plummeting to a measly 1.9 percent, compared with a below-average but respectable 6.8 percent in 2010.
How did this happen? Well, net underwriting losses, fueled by massive catastrophe claims, ballooned nearly six times—from $6.3 billion in 2010 to $34.9 billion last year. That sent the combined ratio skyrocketing from 101.2 to 109.9—the worst nine-month figure since 2001, according to the Insurance Services Office (ISO) and the Property Casualty Insurers Association of America (PCI), which reports on industry-wide results each quarter.
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