2007 Year-end Results

By Dr. Robert P. Hartwig, CPCU
Insurance Information Institute

The property/casualty (P/C) insurance industry reported an annualized statutory rate of return on average surplus of 12.3 percent in 2007, down from 14.4 percent in 2006. The decline in profitability in 2007 was expected and is primarily attributable to a marginal deterioration in underwriting performance, which pushed the full-year combined ratio up to 95.6 from 92.4 in 2006. Net written premium growth was down 0.6 percent in 2007, the first such decline since 1943. At the same time policyholder surplus, a measure of capacity, increased 6.5 percent to a record $517.9 billion.

The results were released  by ISO and the Property Casualty Insurers Association of America (PCI). Though profits remained reasonably strong, industry margins did fall short of those realized by the Fortune 500 group of companies, which turned in an estimated average return on equity (ROE) in the 13 to 14 percent range in 2007.

See the complete report from this link: