U.S. P&C First-Half Net Income Dives 67%; Market Stable But Not Hardening

For personal lines, the first-half net loss was $0.9 billion, compared to net income of $5.8 billion a year ago. The swing is attributable to an underwriting loss of $11.2 billion, driven by catastrophes, A.M. Best says.

For commercial lines, net income dropped 44.2 percent to $5.6 billion in the first half compared to net income of $10 billion a year ago. The underwriting loss was $8.4 billion, and the combined ratio climbed to 108.3 from 100.8.

A.M. Best notes that the P&C industry's top-line growth trended upward, as net-written premiums grew 2.7 percent in the half to $217 billion, up from $211.2 billion a year ago.

Policyholder surplus also increased to $556.2 billion from $554.3 billion.

Investment performance "improved modestly," A.M. Best says, with investment gains coming in at $28.7 billion compared to $27.6 billion a year ago.

Speaking to market conditions, A.M. Best says rate increases continue for personal lines, but commercial lines have not seen widespread rate hardening despite the cat losses.

A report from insurance-broker Marsh also notes that commercial-lines rates have remained stable, but increases have not materialized ouside of catastrophe-exposed risks.

"Across lines of business, insurers priced risks competitively and retained a healthy appetite for new business," says Dean Klisura, Marsh's U.S. risk-practice leader. "Although rates remained relatively stable, reductions were common in many lines. The size of global-insurance-market capacity remains very strong but is more challenged in loss-affected regions."

In its "Insurance Market Update Third-Quarter 2011" report, Marsh says in high-risk earthquake and wind zones, increases stood at 10 percent or more.

Decreases could be found where there were no recent catastrophe losses.

Rate increases were above average in Japan, where rates rose 20 percent across the board no matter what the exposure was. Programs with losses experienced increases as high as 50 percent.

In Australia, where flooding struck the nation earlier this year, increases stood at 5 percent on programs without losses and not involved in mining.

The report says capacity for natural-catastrophe risks "remained constant, though some syndicates at Lloyd's reduced capacity in order to manage their aggregate exposures."

Examining liability rates, overall markets exhibited decreases or were stable with a few exceptions.

In the United States, professional liability, financial institutions and D&O coverage were listed with decreases as high as 10 percent. General liability was the exception, with increases up to 10 percent.

At the top of the insured-catastrophe-loss list through this year was the March earthquake and tsunami in Japan valued at $30 billion in insured losses. The New Zealand earthquake in February is valued at more than $10 billion in insured losses, according to Marsh.

Combining the tornadoes, wildfire and Hurricane Irene losses through the third quarter, the United States surpasses New Zealand on the catastrophe-loss list topping out with more than $17 billion in insured losses. That number is probably higher with flood losses in April through June, but no figures for insured losses were available.