Wednesday, June 29, 2011
The outlook for the U.S. property/casualty insurance industry for the remainder of the year is a cautious one, according to I.I.I. president Dr. Robert Hartwig.
Exceedingly high second-quarter catastrophe losses, the prospect of high underwriting losses associated with non-cat losses and more uncertainty in the investment markets are the main reasons for the cautious outlook.
The U.S. p/c industry reported an annualized statutory rate of return on average surplus of 5.6 percent during the first quarter of 2011, down from 6.8 percent in the year earlier quarter.
Commenting on the industryâ€™s first quarter 2011 results, Dr. Hartwig observed:
â€œIt is important to note that the decline in profitability had nothing to do with the recent devastating tornadoes impacting the Midwest and Southeast this spring, virtually all of which occurred during the second quarter. However, some $2 billion to $5 billion in loss and loss adjustment expense â€“ almost certainly a record â€“ did wind up on the books of U.S. insurers that cover, reinsure or otherwise assume risk from catastrophic events abroad, including the March 11 Japanese earthquake and tsunami, the February 22 New Zealand earthquake, and severe flooding in Australia in January and February.â€
In the U.S., insured catastrophe losses totaled $1.9 billion during the first quarter of 2011. However, Dr. Hartwig noted that this figure will be dwarfed by some $15 billion or more in insured catastrophes for the second quarter, per recent PCS estimates.
The industryâ€™s first quarter 2011 results were released by ISO and the Property Casualty Insurers Association of America (PCI).