According to ALIRT Insurance Research, underwriting results forthe ALIRT P&C Composite deteriorated sharply in 2011 despiteconsiderable reserve releases, due mainly to catastrophelosses.

The ALIRT P&C Composite consists of the 50 largest U.S.personal and commercial-lines insurers, according to the Windsor,Conn.-based firm.

In general, ALIRT says earnings are lower, as is surplus, whileinvestment returns are falling.

On the following pages, ALIRT provides charts that break down indetail the underwriting results, investment results, reservedevelopment, written-premium changes and surplus changes for theALIRT P&C Composite.

All charts were created by ALIRT Insurance Research and usedwith permission.

Click “Next” to begin the slideshow.

2011 accident year underwriting resultsdeteriorated sharply and, despite substantial reserve releases, thereported combined ratio was also significantly worse in 2011, dueto considerable weather-related losses, according to ALIRT. The2011 operating ratio worsened, reflecting the substantialcatastrophe losses and relatively weaker investment income.

Revenue is recovering, ALIRT says, with modest-to-moderategrowth in both direct and net premium after bottoming out in2008-2009.

Composite surplus grew 2.6percent during 2010, but fell 2.2 percent in 2011 due toweaker earnings and sizeable dividends paid, ALIRT notes.

Premium leverage remains fairly low andis leveling off, ALIRT says.

Returns on equity continue to decline, according to ALIRT,falling sharply in 2011 due to catastrophe losses, and in spite ofa lower equity (surplus) base.

Returns on earned premiums have generally trended down since2008. ALIRT says this trend accelerated in 2011, driven bycatastrophe losses.

The ALIRT Composite has not generated an underwriting profitsince 2007, ALIRT says, however despite low interest rates,investment gains continue to outweigh poor underwritingresults.

Investment yields continue to be dampened by low interest rates,ALIRT finds. In 2009 and 2010, net capital gains boosted returnssignificantly, but in 2011 net capital gains were break-even.

Favorable prior year reserve development was declining as thesoft market dragged on, but reserve releases were again quite largefor the ALIRT Composite in 2011.

The reported combined ratio has been helped by favorable reservedevelopment over the last several years. This was particularlynoticeable in 2011 as reserve releases lowered the reportedcombined ratio for the ALIRT Composite by 2.4 points.