The property and casualty industry reported better financial results in the first nine months of 2010, as after tax net income showed a large year-over-year increase from the same period in 2009. The increase was led by higher investment income and realized capital gains by the insurance industry, according to a report on private companies issued by the Insurance Information Institute.
IN PICTURES: 10 Insurance Tips For Homeowners

After Tax Income
The property and casualty industry reported $26.7 billion in net income in the first nine months of 2010, compared to $16.4 billion in the first nine months of 2009. This increase was led by net investment gains, including both higher net investment income and realized capital gains. The industry reported $39.5 billion in net investment gains in the first nine months of 2010, compared to $26.3 billion in the first nine months of 2009.

Underwriting Losses
The industry turned in higher losses from underwriting relative to last year, reporting $6.2 billion in underwriting losses in the first nine months of 2010 compared to only $3.2 billion in 2009. This led to a combined ratio for the industry of 101.2% in 2010, compared to 100.7% in 2009.

Although the data collected by the Insurance Information Institute came from private property and casualty companies, results from public insurance companies in the first nine months of 2010 reflect some of these same trends.

The Public Players
Chubb Group (NYSE:CB) reported net income of $1.6 billion or $4.76 per share in the first nine months of 2010, compared to $1.5 billion or $4.18 per share in the corresponding period in 2009.

Travelers (NYSE:TRV) reported net investment income of $1.82 billion in the first nine months of 2010, compared to $1.63 billion in the same period on 2009.

Although Hartford Financial Services Group (NYSE:HIG) reported realized capital losses during the first nine months of 2010, these losses were down considerably from the same period in 2009. The company reported net realized capital losses of $286 million through Sept 30, 2010, compared to $1.55 billion in 2009.

The rebound has also helped American International Group (NYSE:AIG), one of the largest property and casualty companies and the recipient of a large amount of funds and guarantees from the U.S. Government at the peak of the financial crisis in 2008. The company recently obtained more than $4 billion in credit lines to replace the ones provides by the Federal Reserve.

The Bottom Line
Property and casualty companies, in both the private and public space, are having a more profitable 2010 compared to the previous years, as net investment income moves higher due to a recovery in capital markets. (For related reading in Property and Casualty Insurance, see Intro To Insurance: Property And Casualty Insurance.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    Analyzing Home Depot's Return on Equity (ROE)

    Discover what Home Depot's return on equity (ROE) ratio says about the performance of the company and how it relates to historical averages and industry trends.
  2. Investing

    Asset Manager Ethics: Acting With Competence and Diligence

    Managers must make investment decisions based on their personal investment process, which in turn should be based on solid research and due diligence.
  3. Forex Education

    Understanding The Income Statement

    Learn how to use revenue and expenses, among other factors, to break down and analyze a company.
  4. Stock Analysis

    Will J.C. Penney Come Back in 2016? (JCP)

    J.C. Penney is without a doubt turning itself around, but that doesn't guarantee the stock will respond immediately.
  5. Investing

    Time to Bring Active Back into a Portfolio?

    While stocks have rallied since the economic recovery in 2009, many active portfolio managers have struggled to deliver investor returns in excess.
  6. Economics

    Investing Opportunities as Central Banks Diverge

    After the Paris attacks investors are focusing on central bank policy and its potential for divergence: tightened by the Fed while the ECB pursues easing.
  7. Stock Analysis

    The Biggest Risks of Investing in Pfizer Stock

    Learn the biggest potential risks that may affect the price of Pfizer's stock, complete with a fundamental analysis and review of other external factors.
  8. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  9. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  10. Markets

    PEG Ratio Nails Down Value Stocks

    Learn how this simple calculation can help you determine a stock's earnings potential.
  1. What does low working capital say about a company's financial prospects?

    When a company has low working capital, it can mean one of two things. In most cases, low working capital means the business ... Read Full Answer >>
  2. Do nonprofit organizations have working capital?

    Nonprofit organizations continuously face debate over how much money they bring in that is kept in reserve. These financial ... Read Full Answer >>
  3. Can a company's working capital turnover ratio be negative?

    A company's working capital turnover ratio can be negative when a company's current liabilities exceed its current assets. ... Read Full Answer >>
  4. Does working capital measure liquidity?

    Working capital is a commonly used metric, not only for a company’s liquidity but also for its operational efficiency and ... Read Full Answer >>
  5. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  6. Can working capital be too high?

    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>

You May Also Like

Trading Center