According to an analysis conducted by ISO, profitability of property/casualty (P/C) insurance companies measured on a generally accepted accounting principles (GAAP) accounting basis lags other industries. The return on net worth for Fortune 500 combined companies for the years 2004 to 2013 exceeded that of the P/C industry in every year. Insurers are required to use statutory accounting principles (SAP), which are more conservative than GAAP, when filing annual financial reports with state regulators and the Internal Revenue Service. Insurers outside the United States use standards that differ from SAP and GAAP. Some insurers support a move toward uniform global standards. The P/C industry’s GAAP rate of return in 2013 was 9.0 percent, up from 5.3 percent in 2012.
ANNUAL RATE OF RETURN: NET INCOME AFTER TAXES AS A PERCENT OF EQUITY, 2005-2014