ointing P&C 3Q, 9-Month Results
year compared to last year. Additionally,
realized investment gains are lower,
totaling $4.2 billion in the current year
so far compared to $5.9 billion in the
first nine months of 2010.
have seen the best results of
commercial-lines subsegments over
the first nine months, which Fitch
says is a trend that has continued over
the past several years: “The group’s
aggregate combined ratio rose by 5. 9
points to 98.1, but was still the only
segment in Fitch’s analysis to produce
an underwriting profit.”
The segment benefited from favorable
loss-reserve development, which trimmed
5. 9 points from the aggregate combined
ratio—but that favorable development is
down from the 6. 4 points trimmed in the
28. 4 28. 5
(For group of 47 publicly traded
P&C insurers and reinsurers)
Combined Ratio, Excl.
Reserve Development 108.2 99.5
Excl. Cat Losses and
Sources: Fitch Ratings, Highline Data, company data
$9.7 BILLION - Aggregate net profit for
a group of 47 publicly traded U.S. and
non-U.S. insurers and reinsurers through
the first nine months of 2011 analyzed
by Fitch Ratings. Compare that with a
net profit of $26.4 BILLION during
the same period last year.
first nine months of 2010.
For personal lines, the aggregate combined
ratio jumped from 95.7 to 102.4 as the sector
was hit by Hurricane Irene on the U.S. East
Coast and heavy U.S. tornado activity and
winter-storm losses earlier in the year.
combined ratio is 104.6 for the year so far,
compared to 96.6 at this time last year. Fitch
said only two insurers in its group for this
sector—ACE Ltd. and Hartford—produced
accident-year combined ratios under 100.
Reinsurers in Fitch’s group saw their
aggregate combined ratio climb to 117.3
in the first nine months of the year, up
from 93.1 a year ago, due to first-half
catastrophes such as earthquakes in New
Zealand and Japan, Australian floods, and
U.S. storms. Reinsurers did report a third-
quarter underwriting profit, Fitch said,
as Hurricane Irene losses centered more
toward primary writers.
during the first nine months for the
group was recorded by American
Agricultural Insurance Co., which also
recorded a net underwriting loss of
$123.4 million and a combined ratio
of 145.2—which also led the group
after nine months.
Pointing to P&C trends over the
year so far, Fitch says capital generation
is at a standstill, loss-reserve releases
are moderating, catastrophe losses are
compounding and there has been
a sharp drop in return on capital.
However, Fitch notes that signs of a
pricing shift have materialized.
Fitch believes this price reaction is
well overdue, “but it remains unclear if
momentum will hold for further pricing
improvement that is necessary to return
the broader market to adequate return on
Moody’s adds in its Special Comment
that while 2011 will be remembered for
significant catastrophes, it may also be
remembered for the industry reaching an
inflection point for pricing after multiple
years of declines. “The recent stabilization
in pricing and relatively benign loss
costs should help stem deterioration in
future underwriting performance as the
premiums are earned,” Moody’s says.
108.8 - The combined ratio for a
group of 19 U.S. reinsurers during the
first nine months of 2011.
96.6 - The group’s combined ratio
during the same period in 2010.
Source: Reinsurance Association of America
“However, P&C insurers face headwinds
from weak underwriting margins year-to-
date, low investment yields and sluggish
Moody’s believes these challenges
should help fuel further price increases for
P&C insurers. NU
December 5/12, 2011 | National Underwriter Property & Casualty | 7