U.S. Private Insurers’ Net Income
Down 71% For First-Half 2011
BY MARK E. RUQUET
The first-half results for property and casualty insurers are in, and the numbers are not very pretty, as the
industry reported more than a 71 percent
drop in net income.
in a report issued by the Jersey City,
N.J.-based insurance services Office (isO),
the Des Plaines, ill.-based Property Casualty insurers association of america (PCi)
and the New York-based insurance information institute (i.i.i.), private U.s. P&C
insurers’ net income fell to $4.8 billion for
the first half of 2011 compared to $16.8 billion for the same period a year ago.
Driving the decline were net losses on
underwriting, growing $19 billion to more
than $24 billion for the first half of the year.
the total combined ratio for the carriers
deteriorated 8. 8 points to 110.5 for the first
half of the year.
Catastrophes striking the United states
in the first half of 2011 caused about $24
billion in direct insured losses, before reinsurance recoveries, for all insurers, according to isO’s Property Claim services unit.
that was up $14 billion from the same
period last year. the number is three times
the $8 billion average for first-half direct
catastrophe losses during the past 10 years.
David sampson, PCi’s president and CeO,
says: “Despite record-setting catastrophe losses
from events like the deadly ef 5 tornado that
struck Joplin, Mo. last May, insurers emerged
from first-half 2011 financially sound and
well able to continue providing essential fi-
nancial protection to consumers and busi-
nesses alike—a quiet but important testament
to insurers’ enterprise-risk management and
the effectiveness of state-solvency regulation.”
Michael r. Murray, isO’s assistant
vice president for financial analysis, says:
“the 110.5 combined ratio for the first
half of 2011 is the worst six-month
underwriting result since the 111.1 com-
bined ratio for first-half 2001. even after
adjusting for record catastrophe losses,
the latest data indicates that insurers
continued to face strong headwinds in
their core business: underwriting.”
in his own commentary on the results,
robert P. hartwig, president and chief econ-
omist for i.i.i., notes: “the [P&C] insurance
industry turned in a weak performance
during the first half of 2011. although prof-
itability slumped amid high catastrophe
losses, premium growth remained positive,
investment earnings were more robust than
anticipated and policyholders’ surplus re-
mained near its all-time record high.”
hartwig adds that the outlook for the re-
mainder of the year “is a cautious one given
continued high third-quarter catastrophe
losses, the prospect of high underwriting loss-
es associated with non-cat losses and more
uncertainty in the investment markets.”
Partially offsetting the poor underwriting
results, net-investment gains grew $2.4 bil-
lion to $28.4 billion for the first half of 2011.
the report says that deterioration in
underwriting results is “largely attributable
to a spike in net losses and loss adjustment
expenses (llae) from catastrophes that totaled $24 billion, up from $8 billion in the
first half of 2010.”
INSURANCE SUBSECTOR
JULY 2011
EMPLOYMENT
AUG 2011
EMPLOYMENT
CHANGE
P&C Direct 455,600 453,800 -1,800
Reinsurers 27,300 27,800 +500
Claims Adjusters 47,800 48,000 +200
Agents/Brokers 643,800 641,300 -2,500
Life Direct 373,000 373,600 +600
Health/Medical Direct 417,900 418,100 +200
Title & Other Direct 65,800 66,500 +700
Third-Party Administration 127,600 127,500 -100
All Other Insurance-Related Activities 54,300 54,400 +100
Net Total 2,213,100 2,211,000 -2,100
OVERVIEW OF INSURANCE-SECTOR EMPLOYMENT CHANGES*
*data are through August 2011 and are preliminary (i.e., subject to later revision); not seasonally adjusted.
Source: Insurance Information Institute
E THERE WERE 2,100 fewer jobs in the insurance industry for the month of August, with property and
casualty insurance carriers, agents and brokers taking the biggest hit of the nine industry segments.
