A.M. Best Special Report: U.S. P/C Earnings Down 87% On Underwriting and Investment Losses

OLDWICK, N.J.--(Business Wire)--
The U.S. property/casualty`s net income plunged approximately 87% to $1.2
billion in first quarter 2009, as challenging underwriting and investment
markets continued to drag down results. The year-over-year decline in earnings
was primarily due to the severe and prolonged turmoil in the financial markets
and the related impact on the industry`s net investment income and realized
capital losses.

The following results are for first quarter 2009, year over year.

* Net premiums written (NPW) fell $4.2 billion, or 3.8%, to $107.6 billion from
$111.8 billion.
* The industry recorded an underwriting loss of $0.8 billion, driven by
continued rate pressure, lower top line growth, weather-related losses and the
impact of significant losses reported by mortgage and financial guaranty
insurers.
* The combined ratio rose to 100.5 from 99.8.
* The mortgage and financial guaranty segments reported an underwriting loss of
$1.9 billion and posted a combined ratio of 220.8, adding approximately two
percentage points to the industry`s combined ratio.
* Net investment gains fell $8.7 billion to $4.4 billion, down from $13.1
billion.
* The personal lines segment`s underwriting results deteriorated, with a
reported calendar year combined ratio of 100.7, up from 98.4.
* The commercial lines segment`s combined ratio improved modestly to 101.2,
compared with 102.1.
* The U.S reinsurance segment posted a healthy combined ratio of 94.3, compared
with 92.9.
* In other measures:
* The industry`s policyholder surplus declined $82.0 billion, or 15.5%, to
$447.2 billion for the 12 months ended March 31, 2009.
* The annualized after-tax return on equity fell to 0.2% for the 12 months ended
March 31, 2009, down from 1.8% for the 12 months ended March 31, 2008.
* As expected, 2009 is shaping up to be another challenging year for the U.S.
property/casualty industry, and the unfavorable economic, investment and
underwriting environments are expected to continue straining underwriting and
operating results through the remainder of the year.

Access a copy of this special report. BestWeek subscribers can download a PDF
copy of all special reports as well as the associated spreadsheet data.
Non-subscribers can access an excerpt of each special report and purchase
individual reports and spreadsheet data.

Founded in 1899, A.M. Best Company is a global full-service credit rating
organization dedicated to serving the financial and health care service
industries, including insurance companies, banks, hospitals and health care
system providers. For more information, visit www.ambest.com.

A.M. Best
Analysts
Edward Keane, 908-439-2200, ext. 5291
edward.keane@ambest.com
or
Michelle Baurkot, 908-439-2200, ext. 5507
michelle.baurkot@ambest.com
or
Public Relations
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com

Copyright Business Wire 2009