Tuesday, March 24, 2009

Fitch: Underwriting Profit Overwhelmed By Investment Losses for U.S. P/C Insurers

The U.S. property/casualty insurance industry's net profits tumbled in 2008, according to Fitch Ratings in a new report.

While operating performance was expected to decline from the strong results of 2006 and 2007 due to more traditional competitive pressures, the impact of the sharp deterioration in economic conditions and investment markets overwhelmed these concerns.

In a new special report, Fitch evaluates full year 2008 industry performance based on a compilation of GAAP earnings release and 10-K filing data from 49 property/casualty insurance organizations.

Performance for the year for Fitch's rated P/C universe showed flat or reduced premiums in many cases, poorer underwriting results due to weaker pricing and significantly higher catastrophe-related losses, particularly due to Hurricane Ike. Nonetheless, the large majority of insurers in the group reported an underwriting profit for the year.

Operating profits for the group, declined considerably for the year. However, a number of market participants reported reasonable operating returns on capital. When investment losses are considered, a larger percentage of insurers reported unfavorable returns or net losses, as well as declines in GAAP shareholders' equity for the full year.

To access this Special report, 'Property/Casualty Insurers Year-End 2008 Review', please visit Fitch's web site at www.fitchratings.com under the following headers:

Financial Institutions > Insurance > Special Reports.