NU Online News Service, Sept. 16, 3:31 p.m. EDT

Net income for private property & casualty insurance companies in the United States increased more than $10 billion in the first half of 2010 compared to the same time period in 2009.

Results were driven by a $13.3 billion increase in investment income in the first six months to $25.8 billion. This also allowed insurers to increase policyholder surplus to 3.7 percent to $530.5 billion, compared with last year during the same period.

However, the p&c insurance industry took an underwriting loss of $5.1 billion for the first six months of 2010 compared with a loss of $2.1 billion in 2009. The combined ratio as of June 30 was 101.7 from 100.8 a year ago during the same time, according to a joint press release from ISO, the Insurance Information Institute (I.I.I.) and the Property Casualty Insurance Association of America (PCI).

The underwriting decline reflects a drop in net earned premiums, which fell $4 billion to $207.1 billion during the first six months of this year compared with last year because of previous declines in written premiums.

"The absence of premium growth in first-half 2010 reflects the ongoing consequences of a once-in-a-lifetime economic storm," said David Sampson, president and chief executive officer of PCI. "The weakness in the economy reduced demand for insurance and thereby contributed to continued softening in commercial insurance markets."

Yet the weakness in the economy may have allowed companies to release reserves to help first-half results, said Michael R. Murray, assistant vice president for financial analysis at ISO. Economic conditions may have had a beneficial effect on claims frequency and severity this year compared with the last, meaning companies had more in reserves.

Reserve releases increased $1.7 billion to $8.89 billion during the first half of this year compared with the same time in 2009.

Excluding reserve releases, net losses on underwriting was $13.9 billion from $9.3 billion last year and the combined ratio was 106 from 104.2, added Mr. Murray.

Special Reports /

P&C Industry Takes First-Half Underwriting Loss, But Profits Up

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