NU Online News Service, March 17, 12:37 p.m. EDT
A dozen more U.S. insurance and reinsurance companies observed by Fitch Ratings posted a combined ratio over 100 in 2010 compared to 2009.
According to its annual report compiled from the financial results of 49 publicly traded insurance and reinsurance companies in the U.S., Fitch said the aggregate combined ratio of the group was 97.7 in 2010, up from 94.3 reported by the group the prior year.
Sixteen companies recorded a combined ratio of more than 100 compared to four in 2009, Fitch said.
Catastrophe losses added 4.8 points to the combined ratio, up from 2.0 points in 2009. Catastrophe losses totaled $12.6 billion in 2010 compared to $5.1 billion in 2009.
Events during the year included earthquakes in Chile and New Zealand, Winter Storm Xynthia in Europe and several winter storms in the U.S., as well as the Deep Water Horizon oil platform disaster.
Reserve releases improved 2010 combined ratios by 2.4 points—about the same as the results in 2009.
"Underwriting performance is more likely to deteriorate going forward given no improvement in market competitive fundamentals and an anticipated reduction in future favorable loss reserve development based on Fitch's view that reserve adequacy had weakened recently," the report states.
Looking ahead, Fitch said first quarter catastrophes could significantly impact insurers' and reinsurers' earnings during the period. Several global reinsurers had already exhausted most if not all of their 2011 catastrophe budget and there remains the potential for further catastrophe loss exposure the rest of the year.
In the personal lines segment, only Allstate, Progressive and Infinity Property and Casualty Corp. recorded combined ratios below 100 for the year. The combined ratio of the six personal line companies in this group was an aggregate of 96.5.
In aggregate, commercial lines insurers recorded a combined ratio of 98.8 in 2010, up nearly 3.0 points for the year before.
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