Industry Overview
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INSURANCE INDUSTRY AT A GLANCE
- World insurance premiums (life and nonlife) totaled $4.1 trillion in 2007, according to Swiss Re.
- Data from Highline/National Association of Insurance Commissioners show U.S. property/casualty insurance premiums (excluding state funds), totaled $448.9 billion in 2006, up 4.6 percent from $429.2 billion in 2005.
- The same data show premiums in the life/health sector totaled $583.6 billion, up 10.5 percent from $528.1 billion in 2005.
- The transaction value of insurance-related mergers and acquisitions totaled $23.6 billion in 2006, down from $49.8 billion in 2005.
- There were 2,648 property/casualty insurance companies and 1,257 life/health insurance companies in the United States in 2006. Many of these companies were part of larger entities. Total assets of property/casualty insurers totaled $1.483 trillion in 2006. Cash and invested assets were $1.229 trillion, or 83 percent. Life/health insurer total assets were $4.723 trillion in 2006. Cash and invested assets of these insurers amounted to $2.874 trillion, or 61 percent.
- The property/casualty insurance industry's rate of return on a statutory basis increased from 10.7 percent in 2005 to 13.4 percent in 2006. The life/health insurance industry's rate of return on a GAAP basis dropped from 13 percent in 2005 to 12 percent in 2006.
- The property/casualty insurance industry’s aftertax net income rose from $46.4 billion dollars in 2005 to $66.7 billion in 2006, according to Highline/National Association of Insurance Commissioners. Life/health aftertax net income fell from $35.9 billion to $34.0 billion.
- Insured catastrophe losses totaled $9.2 billion in 2006, down significantly from $62.3 billion in 2005, the highest on record. There were 33 events in 2006. The only storm to cause notable damage was Tropical Storm Ernesto. It produced $245 million in insured losses. In 2005, six hurricanes caused $60.2 billion in insured damages.
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PREMIUMS OF PROPERTY/CASUALTY AND LIFE/HEALTH
INSURANCE INDUSTRIES, 1997-2006
($ billions, excludes state funds)
(1) Includes deposit-type funds beginning in 2001.
Source: National Association of Insurance Commissioners (NAIC) Annual Statement Database, via Highline Data, LLC. Copyrighted information. No portion of this work may be copied or redistributed without the express written permission of Highline Data, LLC.
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EMPLOYMENT IN INSURANCE, 1998-2007
(Annual averages, 000)
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Insurance carriers |
Insurance agencies, brokerages and related services |
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Direct insurers (1) |
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Year |
Life, health and medical |
Property/ casualty |
Reinsurers |
Total |
Insurance agencies and brokers |
Other insurance- related activities (2) |
Total |
Total industry |
Insurance and employee benefit funds (3) |
| 1998 | 816.8 | 592.0 | 34.3 | 1,443.1 | 574.9 | 191.5 | 766.3 | 2,209.4 | 41.4 |
| 1999 | 815.3 | 603.9 | 33.5 | 1,452.7 | 585.3 | 198.1 | 783.4 | 2,236.1 | 44.9 |
| 2000 | 808.8 | 591.6 | 32.3 | 1,432.7 | 587.5 | 200.3 | 787.8 | 2,220.6 | 46.4 |
| 2001 | 807.7 | 591.3 | 31.4 | 1,430.4 | 597.9 | 205.3 | 803.2 | 2,233.7 | 48.4 |
| 2002 | 791.1 | 590.0 | 31.7 | 1,412.8 | 616.0 | 204.4 | 820.4 | 2,233.2 | 47.2 |
| 2003 | 789.0 | 608.6 | 31.0 | 1,428.6 | 628.5 | 208.9 | 837.4 | 2,266.0 | 47.1 |
| 2004 | 764.4 | 604.4 | 29.8 | 1,398.6 | 643.3 | 216.8 | 860.1 | 2,258.6 | 47.0 |
| 2005 | 761.9 | 595.0 | 28.8 | 1,385.7 | 650.1 | 223.5 | 873.6 | 2,259.3 | 46.4 |
| 2006 | 787.4 | 597.4 | 28.0 | 1,412.8 | 659.9 | 230.9 | 890.8 | 2,303.7 | 47.8 |
| 2007 | 782.3 | 588.6 | 27.7 | 1,398.6 | 676.6 | 232.9 | 909.5 | 2,308.1 | 47.7 |
(1) Establishments primarily engaged in initially underwriting insurance policies.
(2) Includes claims adjusters, third-party administrators of insurance funds and other service personnel such as advisory and insurance ratemaking services.
(3) Includes employees of legal entities organized to provide insurance and employee benefits exclusively for the sponsor, or its employees or members. These employees are not included in the total for the insurance industry.
Source: U.S. Department of Labor, Bureau of Labor Statistics. |
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POLICYHOLDERS' SURPLUS
A property/casualty insurer must maintain a certain level of surplus to underwrite risks. This financial cushion is known as “capacity.” When the industry is hit by high losses, such as a major hurricane, capacity is diminished. It can be restored by increases in net income, favorable investment returns, reinsuring more risk, and/or raising additional capital.
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PROPERTY/CASUALTY INSURANCE INDUSTRY INCOME ANALYSIS, 2002-2006 (1)
($ billions)
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2002 |
2003 |
2004 |
2005 |
2006 |
| Net written premiums | $369.7 | $404.4 | $424.1 | $425.7 | $443.8 |
| Percent change | 14.3% | 9.4% | 4.9% | 0.3% | 4.3% |
| Earned premiums | $348.5 | $386.3 | $413.8 | $417.7 | $435.8 |
| Losses incurred | 238.8 | 238.7 | 247.8 | 256.3 | 231.1 |
| Loss adjustment expenses incurred | 44.8 | 50.0 | 53.1 | 55.1 | 52.6 |
| Other underwriting expenses | 93.8 | 100.7 | 106.8 | 109.8 | 117.5 |
| Policyholder dividends | 1.9 | 1.9 | 1.7 | 1.9 | 3.4 |
| Underwriting gain/loss | -30.8 | -4.9 | 4.3 | -5.6 | 31.2 |
| Investment income | 37.2 | 38.6 | 40.0 | 49.7 | 52.3 |
| Miscellaneous income/loss | -0.8 | 0.0 | -0.3 | 1.0 | 1.0 |
| Operating income/loss | 5.6 | 33.8 | 44.0 | 45.1 | 84.6 |
| Realized capital gains/losses | -1.2 | 6.6 | 9.1 | 9.7 | 3.4 |
| Incurred federal income taxes/credit | 1.3 | 10.3 | 14.6 | 10.7 | 24.2 |
| Net income after taxes | 3.0 | 30.0 | 38.5 | 44.2 | 63.7 |
(1) Data in this chart may not agree with similar data shown elsewhere due to different sources.
Source: ISO. |
| - The U.S. property/casualty industry posted a $31.2 billion net gain on underwriting in 2006, driven by a sharp decline in catastrophe losses from hurricanes and other natural disasters that year. This contrasts with an underwriting loss of $5.6 billion the previous year.
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LEADING WRITERS OF PROPERTY/CASUALTY INSURANCE
BY DIRECT PREMIUMS WRITTEN, 2006
($000)
Rank |
Group |
Direct premiums written (1) |
Market share (2) |
| 1 | State Farm Group | $49,614,181 | 10.0% |
| 2 | American International Group | 37,859,639 | 7.6 |
| 3 | Zurich Insurance Group | 28,021,317 | 5.6 |
| 4 | Allstate Insurance Group | 27,879,416 | 5.6 |
| 5 | Travelers Group | 22,042,925 | 4.4 |
| 6 | Liberty Mutual Insurance Group | 18,121,842 | 3.7 |
| 7 | Nationwide Group | 16,045,069 | 3.2 |
| 8 | Berkshire Hathaway Insurance Group | 15,211,387 | 3.1 |
| 9 | Progressive Group | 14,389,701 | 2.9 |
| 10 | Hartford Fire & Casualty Group | 11,734,580 | 2.4 |
(1) Before reinsurance transactions, excluding state funds.
(2) Based on U.S. total including territories.
Source: National Association of Insurance Commissioners (NAIC) Annual Statement Database, via Highline Data, LLC. Copyrighted information. No portion of this work may be copied or redistributed without the express written permission of Highline Data, LLC. |
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TOP TWENTY U.S. PROPERTY/CASUALTY COMPANIES BY REVENUES, 2007 (1)
($ millions)
Rank |
Group |
Revenues |
Assets |
| 1 | Berkshire Hathaway | $118,245 | $273,160 |
| 2 | American International Group | 110,064 | 1,060,505 |
| 3 | State Farm Insurance Cos. | 61,612 | 181,422 |
| 4 | Allstate | 36,769 | 156,408 |
| 5 | Travelers Cos. | 26,017 | 115,224 |
| 6 | Liberty Mutual Insurance Group | 25,961 | 94,679 |
| 7 | Hartford Financial Services | 25,916 | 360,361 |
| 8 | Nationwide | 22,962 | 161,090 |
| 9 | Loews | 17,920 | 76,079 |
| 10 | Progressive | 14,687 | 18,843 |
| 11 | United Services Automobile Assn. | 14,418 | 67,177 |
| 12 | Chubb | 14,107 | 50,574 |
| 13 | Assurant | 8,454 | 26,750 |
| 14 | First American Corp. | 8,196 | 8,648 |
| 15 | American Family Insurance Group | 6,969 | 16,004 |
| 16 | Safeco | 6,209 | 12,640 |
| 17 | W.R. Berkley | 5,554 | 16,832 |
| 18 | Fidelity National Financial | 5,524 | 7,556 |
| 19 | Auto-Owners Insurance | 5,129 | 13,680 |
| 20 | Erie Insurance Group | 4,737 | 14,215 |
(1) Revenues for insurance companies include premium and annuity income, investment income and capital gains or losses but exclude deposits.
Source: Fortune. |
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TOP TWENTY U.S. LIFE/HEALTH INSURANCE GROUPS BY REVENUES, 2007 (1)
($ millions)
Rank |
Group |
Revenues |
Assets |
| 1 | MetLife | $53,150 | $558,562 |
| 2 | Prudential Financial | 34,401 | 485,814 |
| 3 | New York Life Insurance | 29,280 | 179,621 |
| 4 | TIAA-CREF | 27,526 | 420,315 |
| 5 | Massachusetts Mutual Life Insurance | 25,268 | 172,911 |
| 6 | Northwestern Mutual | 22,597 | 156,547 |
| 7 | AFLAC | 15,393 | 65,805 |
| 8 | Genworth Financial | 11,443 | 114,315 |
| 9 | Principal Financial | 10,907 | 154,520 |
| 10 | Lincoln National | 10,738 | 191,435 |
| 11 | Unum Group | 10,567 | 52,433 |
| 12 | Guardian Life Ins. Co. of America | 10,071 | 41,319 |
| 13 | Thrivent Financial for Lutherans | 6,133 | 57,412 |
| 14 | Pacific Life | 5,325 | 111,024 |
| 15 | Western & Southern Financial Group | 4,811 | 30,941 |
| 16 | Conseco | 4,572 | 33,515 |
| 17 | Mutual of Omaha Insurance | 4,337 | 17,746 |
| 18 | CUNA Mutual Group | 3,850 | 14,946 |
| 19 | Torchmark | 3,487 | 15,241 |
| 20 | American National Insurance | 3,071 | 18,465 |
| (1) Revenues for insurance companies include premium and annuity income, investment income and capital gains or losses but exclude deposits.
Source: Fortune. |
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PROPERTY/CASUALTY INSURER FINANCIAL ASSET DISTRIBUTION, 2003-2007
($ billions)
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