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.
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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.
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.)
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