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Insurers' capacity reaches record high for first half 2014

Because capacity increased at a higher rate than that of profits, the industry rate of return fell. Winter and spring catastrophes also contributed to weaker underwriting performance.

By Melissa Hillebrand | Updated on October 06, 2014

P&C net income after taxes increased by $1.6 billion (6.4%) to $26 billion among private U.S. insurers in the first half of 2014, according to the Insurance Services Office (ISO) and the Property Casualty Insurers Association of America (PCI).

In the same period, overall industry capacity (as measured by policyholder surplus) increased by $58.1 billion, or 9.4%, to a new record high at $671.6 billion. However, because capacity increased at a rate faster than that of profits, the overall industry rate of return fell by 0.3 percentage points in the first half of 2014 to 7.8%, says Robert P. Hartwig, president of the Insurance Information Institute (III), a number that falls far short of average industry norms of 9.0% from 1955 to 2013.

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