Weiss Ratings: P/C Insurers Earn $41.3 Billion in 2004

Apparently unfazed by last year’s devastating hurricane season, the nation’s property and casualty insurers reported profits of $41.3 billion in 2004, representing a 28 percent increase over the $32.3 billion earned in 2003, according to Weiss Ratings Inc., an independent provider of ratings and analyses of financial services companies, mutual funds, and stocks.

“Property and casualty insurers’ continue to post impressive results,” said Melissa Gannon, vice president of Weiss Ratings Inc. “The ability to withstand such a horrific hurricane season is an indicator of the industry’s long-term financial strength.”

Contributing to the industry’s outstanding performance, underwriting profits reached a record high, surging to $6.4 billion as of Dec. 31, 2004 compared to a $2.9 billion loss the previous year. The underwriting gain was primarily due to an increase in earned premiums, which jumped from $387.7 billion in 2003 to $414.3 billion in 2004.

Improved underwriting was also responsible for a $51.5 billion, or 11.6 percent, increase in capital and surplus, which rose from $444.8 billion at Dec. 31, 2003 to $496.3 billion at Dec. 31, 2004.

As a result of the improved underwriting, the industry’s loss ratio, which represents the percentage of losses paid out compared to earned premium collected, declined further. The overall loss ratio, which does not include loss adjustment expenses or underwriting expenses, fell to 59.8 percent for 2004 from 61.7 percent for 2003.

The industry also improved its combined ratio to less than 98.9 in 2004, which is a 1.9 point improvement over the 100.1 posted in 2003.

The lines of business posting the highest loss ratios for 2004 were products liability and health at 79.9 points and 69.2 points, respectively. Products liability was actually up 5.76 points over last year, while health was down 3.2 points.

Among the 2,534 property and casualty insurers reviewed by Weiss, 90 companies were upgraded, while 87 were downgraded.