The P/C industry’s profits may still be reasonably strong, but industry margins are virtually guaranteed to fall well short of those realized by the Fortune 500 group of companies which is expected to turn in an average return on equity in the 14 to 15 percent range this year. That’s the view of I.I.I. president Dr. Robert Hartwig in his commentary on the industry’s first-half 2007 financial results. A decline in overall profitability due to a marginal deterioration in underwriting performance are the low notes of what was otherwise a strong first half performance that bodes well for the rest of the year. The headline numbers: the industry’s annualized statutory rate of return on average surplus declined to 13.1 percent during the first half of 2007, down from 13.5 percent in last year’s first half; the industry’s combined ratio deteriorated slightly to 92.7, compared with 92.0 during the first half of 2006. Point of interest: ISO estimates that the combined ratio would have had to improve to 91.5 percent in order for insurers to have earned the 13.9 percent long-term average rate of return for the Fortune 500. Nevertheless, the industry is on track to record what could be its seventh best combined ratio since 1920. But, intensifying competition is taking its toll on insurers with premium growth at just 0.1 percent in the first half of 2007. If maintained through the rest of the year, this would represent the lowest growth rate for the industry during the past 40 years. Check out Dr. Hartwig’s full commentary at http://www.iii.org/media/industry/financials/2007firsthalf/