The U.S. property/casualty industry posted a $24.4 billion net gain on underwriting through nine months as a result of the decline in catastrophe losses in 2006. The figure stands in stark contrast to the $2.5 billion net loss on underwriting through nine-months 2005.

The industry's positive underwriting results contributed to an increase in net income after taxes to $44.9 billion in nine-months 2006 from $29.7 billion in nine-months 2005. According to ISO and the Property Casualty Insurers Association of America, the industry's annualized rate of return on average policyholders' net worth rose to 13.4 percent in nine-months 2006 from 9.8 percent in nine-months 2005. The figures are consolidated estimates for all private property/casualty insurers based on reports accounting for at least 96 percent of all business written by private U.S. property/casualty insurers.

“Allowing for losses from Katrina and Rita that didn't emerge until after insurers closed their books for nine-months 2005 and factoring out losses covered by residual market insurers, ISO estimates the catastrophe losses included in private U.S. insurers' net financial results declined by $17.3 billion to $10.1 billion in nine-months 2006 from $27.5 billion in nine-months 2005,” said Michael R. Murray, ISO assistant vice president for financial analysis.

“While the fact that no major hurricanes hit the U.S. in 2006 was certainly good news for the millions of consumers still recovering from the devastating impact of the 2004 and 2005 storm seasons, we view this development as an anomaly rather than a trend,” said Genio Staranczak, PCI's chief economist.

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Low Catastrophe Losses Signal Underwriting Gains

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