On the following pages, ALIRT breaks down the industry's performance in several areas through charts and analysis based on the reported results of its composite of insurers.

The ALIRT P&C composite is comprised of 50 large U.S. personal and commercial lines P&C insurers representing approximately 53 percent of total industry net written premium. The composite excludes professional reinsurers.

All charts are from ALIRT Insurance Research.

After reaching a multi-year high in 2011, due in part to substantial storm/catastrophe losses, accident year underwriting ratios improved in 2012 and through June 30, 2013, says ALIRT. ALIRT points out that the composite's accident year results have underperformed reported results for 28 consecutive quarters, which is a reflection of continued reserve releases into earnings. ALIRT also says that, traditionally, this has been an indication of a softer market.

Direct premium growth flattened in the first half of 2013, but ALIRT says net premium growth spiked “due to the reorganization of large intercompany pooling arrangements at Liberty Mutual, Nationwide, and W.R. Berkley whereby the lead pool writers (members of the ALIRT composite) retained far more premium than in prior year periods.”

After growing 8.5 percent in 2012 on stronger underwriting results and solid net capital gains, ALIRT says surplus growth (above) slowed in the first half of 2013 due to $15.4 billion in net capital paid out to parent companies and miscellaneous changes to capital of $10.7 billion. ALIRT says capital paid out and other changes were dominated by two companies in its composite.

Premium leverage (below) rose slightly in the first half of 2013, but remained low, reflecting ample financial capacity to write business, says ALIRT.

Note: Premium leverage is annualized for the first six months of 2013.

After declining sharply in 2011, due in part to large catastrophe losses, ALIRT says returns on equity (above) and earned premiums (below) rebounded in 2012 and then “grew considerably” in the first half of 2013 thanks to improved underwriting results.

Note: Returns on equity are annualized for the first six months of 2013.

ALIRT says its composite generated an underwriting profit, albeit a small one, in 2013's first half despite large tornado losses in Oklahoma during May. In addition to the figures listed, the composite posted pretax operating income of $13.8 billion for 2013's first half, which is 65 percent higher than in the previous year period.

Net investment yield (below) continues to be dampened by low interest rates, says ALIRT, but “capital gains provided a boost to the net total return in 2012 and even more so during the first six months of 2013 as equity markets surged.”

Note: Investment returns are annualized for the first six months of 2013.

Favorable prior year reserve development eased in 2009-2010, but ALIRT says reserve releases were again substantial in 2011, 2012 and through 2013's first half (above). ALIRT says recent rate increases appear to be driving additional redundancies, as $4.8 billion of the nearly $5.1 billion in redundancies reported for 2013's first half were from accident years 2011 and 2012.

ALIRT says current accident year reserve releases “were concentrated in personal lines carriers, with 94 percent of aggregate reserve releases reported by personal lines predominant companies” as of June 30. ALIRT adds that 65 percent of reserve releases were reported by two State Farm Mutual subsidiaries.

ALIRT says the favorable reserve development continues to benefit the industry's combined ratio (below), particularly in the first half of 2013.

ALIRT says its P&C Composite Index, which tracks industry financial performance, “rose sharply in Q1 2013 on much stronger underwriting and operating earnings for both commercial and personal lines writers. Composite ALIRT Scores flattened out for the 6 month period but remain strong historically, especially for the commercial lines sector.”