The U.S. Insurance Industry Regained Lost Ground in 2009, According to Highline Data
CAMBRIDGE, Mass., March 11 /PRNewswire/ -- Property and casualty insurance industry net income nearly tripled in 2009, to $35 billion, according to the Highline Data Performance Monitor.
The Performance Monitor, which aggregates key statutory financial data reported by individual insurance companies every quarter, also found that the life insurance industry saw net gain from operations more than triple to a five-year high of $76.2 billion, up from last year's five-year low of $17.6 billion.
The steep rise in net gain from operations was due to a greater decrease in premiums written, 16 percent, than in benefits paid, 14 percent, over the course of the year. This also drove life insurers' return on equity to a five-year high of 15.2 percent.
The absence of major catastrophes during the year gave property and casualty insurers their biggest decline in net losses incurred, 11.3 percent in the past ten years.
These findings demonstrate that the industry as a whole has regained a considerable amount of ground lost during the economic crisis, but not all of it. Insurers entered 2010 in better shape than they did 2009, but were still behind where they were in recent years on many key measures.
- Despite their impressive gains in 2009, the $35 billion in net income for property and casualty insurers was still less than half that seen in 2006, $73.2 billion.
- The combined ratio for the property and casualty industry, while down to 101.3% from last year's high of 105.1%, is still above the break even point. The combined ratio measures how well a company is performing its daily operations by combining the loss and expense ratios. Because the ratio was above 100%, the industry as a whole suffered an underwriting loss in 2009.
- Driven in part by the continued pressure on interest rates in equity markets, net investment income for life insurers hit a five-year low of $154.5 billion at year's end. Net yield likewise hit a five-year low of 5.1 percent.
"Being the first to deliver annual statement data to the industry once again, we at Highline Data continue to give our customers an edge in the marketplace," Laurie Dallaire, vice president and director of Highline Data, said. "Our findings suggest that property and casualty companies will continue to strive to contain expenses and further reduce their combined ratios while life companies will continue to rebuild capital and improve investment yields this year."
On March 1, Highline Data was the first to publish comprehensive statutory financial statements from individual insurance companies. Currently, financial statements for all 3,313 individual companies that have filed are available via Insurance Analyst PRO, including 97 percent of the property and casualty industry and 90 percent of the life industry. Insurance Analyst PRO is the market's premier online source for insurance industry statutory and GAAP financial analysis.
All of the data used in this analysis is available in Insurance Analyst PRO. The data is derived from the annual statutory financial statements filed with the National Association of Insurance Commissioners (NAIC) by individual companies.
HIGHLINE DATA 2009 ANNUAL PERFORMANCE MONITOR KEY FINDINGS
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P&C Insurance Industry Life Insurance Industry
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% Change % Change
Net Unrealized Capital
Net Income 274.3% Gains (Losses) 86.8%
Total Assets 3.6% General Account Assets 1.8%
Policyholder Surplus 11.7% Separate Account Assets 19.0%
Net Premiums Earned -3.8% Capital & Surplus 16.5%
Net Losses Incurred -11.3% Net Premiums -16.5%
Loss Adjustment Expense 1.5% Net Investment Income -4.7%
Net Premiums Written -4.0% Net Gain from Operations 332.7%
-------------------- ---- ------------------------ -----
2009 Ratio 2009 Ratio
Loss Ratio 73.0% Net Yield 5.1%
Expense Ratio 28.2% After Tax Return on Equity 15.2%
Combined Ratio 101.3% Action Level RBC Ratio 833.6%
Action Level RBC Ratio 638%
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Property & Casualty Insurance Industry Net Income, 2005-2009
2005 $49.8 billion
2006 $73.2 billion
2007 $68.7 billion
2008 $9.4 billion
2009 $35 billion
Life Insurance Industry Net Gains from Operations, 2005-2009
2005 $61.9 billion
2006 $63 billion
2007 $67.4 billion
2008 $17.6 billion
2009 $76.2 billion
About Highline Data
Highline Data is part of Summit Business Media. Summit Business Media is the leading B2B media and information company serving the insurance, investment and professional services markets through a variety of channels, including print, online and live events. SBM provides breaking news and analysis, in-depth practice management strategies and business-building techniques, and actionable data to the markets it serves. Through its Media and Reference Divisions, the company publishes 19 magazines and 150 reference titles. The Events Division hosts a dozen conferences in support of Summit's magazine brands and sponsors the International Investment Conferences on global mining investment. SBM's Data Division, comprised of Highline Data, Judy Diamond Associates, Agent Media and Kirschner's, is the leading data provider of financial and marketing information on insurance companies, agents and investment advisors.
Summit, a Wind Point company, employs 400 employees in a dozen offices across the United States. For more information, please visit summitbusinessmedia.com.
SOURCE Highline Data
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