US insurance industry profit takes 80% hit in 2008
Poor underwriting and investment results combined to erode US property and casualty market net profit by 80% last year, according to ratings organisation AM Best.
It says the 2008 US market net profit is $US14 billion ($21.3 billion) and has warned insurers that heavy discounting is unsustainable.
“Declining underwriting results and weak investment markets have brought property/casualty insurers to a critical point where future profitability depends on strict adherence to underwriting and reserving discipline – even at the expense of market share,” AM Best said in a report.
Intense competition among domestic and international insurers has combined with the US recession, rising unemployment and higher energy prices to produce the second consecutive decrease in net written premium. It is the first back-to-back decline since 1932/33.
Insurers are expected to book a collective underwriting loss of $US21.5 billion ($32.7 billion) for 2008 while the combined ratio is forecast to worsen dramatically from 92.4% to 104.7%.
It says the 2008 US market net profit is $US14 billion ($21.3 billion) and has warned insurers that heavy discounting is unsustainable.
“Declining underwriting results and weak investment markets have brought property/casualty insurers to a critical point where future profitability depends on strict adherence to underwriting and reserving discipline – even at the expense of market share,” AM Best said in a report.
Intense competition among domestic and international insurers has combined with the US recession, rising unemployment and higher energy prices to produce the second consecutive decrease in net written premium. It is the first back-to-back decline since 1932/33.
Insurers are expected to book a collective underwriting loss of $US21.5 billion ($32.7 billion) for 2008 while the combined ratio is forecast to worsen dramatically from 92.4% to 104.7%.