Despite the highest premium increases in the US market since 1986, the property/casualty industry’s operating surplus actually fell last year. The New Jersey-based Insurance Services Office (ISO) says the operating surplus for 2002 was $448 billion – 1.5% lower than 2001.

Blaming plummeting investment values, ISO said in a bulletin that premiums in the US grew by more than 14% last year – a 16-year high – and net income after taxes increased to $4.4 billion. That was much better than the unprecedented industry-wide loss of $10.8 billion recorded in 2001.

The industry’s net underwriting loss in 2002 was $47.2 billion – much better than the record $81.5 billion recorded in 2001. The combined ratio improved to 103.9% from 112.5% in 2001.