U.S. property/casualty industry sees first drop in net premium written since 1943

Net income for the U.S. property and casualty industry fell to US$66.5 billion in 2007 from US$71.3 billion in 2006, according to an A.M. Best special report. The industry also saw its underwriting profits wilt, shrinking to US$22.1 billion in 2007, compared to the US$32 billion it posted in 2006. “Driven by across-the-board softening in personal and commercial lines pricing, leakage of premium and a growing interest in alternative forms of risk transfer, net premiums written fell nearly 1.0% to [US]$446.0 billion in 2007,” A.M. Best reports in the release, noting that this is the first drop since 1943. The industry’s combined ratio in 2007 was 94.9%, compared to the 92.2% result in 2006. Total catastrophe losses in 2007, at an estimated US$6.7 billion, were among the lowest on record, A.M. Best observes. “The personal lines segment’s underwriting results remained strong on favorable but flattening private passenger auto loss-frequency trends, moderate but increasing loss-severity trends and a lack of significant catastrophes,” A.M. Best reports. “The commercial lines segment reported its second consecutive underwriting profit in 2007, reflecting continued underwriting discipline, favorable loss-reserve development and mild catastrophe losses.”