Insurance Information

For the property and casualty industry, the ratio of premiums to surplus stood at 0.95, by year-end 2008. Compare this with the average for the ratio of premiums to surplus for the last 50 years of 1.52 with a range from a low of 0.84 at the end of year 1998 to a high of 2.75 at the end of year 1974. In a similar way by the end of year 2008, the ratio of loss and loss adjustment expense reserves to surplus was at 1.22. Compare this with a 50 year average for that ratio of 1.43 during the 50 years ending 2008. This also ranged from being at a low of 0.59 at the end of year 1961 to a high of 2.13 at the end of 1974.

Included in industry additions to combined surplus in 2008 were insurers’ $2.4 billion in net income after taxes, along with $11.2 billion of new additional funds that were paid in the form of new capital raised by insurers, and another $0.3 billion which represents miscellaneous other surplus changes. Deductions from surplus more than offset those additions. This includes a figure not included in net income of $52.9 billion in unrealized capital losses on investments in addition to $23.3 billion in dividends to shareholders.

Up $8 billion from $3.2 billion reported for 2007 is the $11.2 billion in new funds that were paid in during 2008.

In 2008 there was also a $52.9 billion in unrealized capital losses. This figure is $52.2 billion more than $0.6 billion in unrealized capital losses on investments in 2007 reported for insurers.

Down $8.9 billion is the figure of $23.3 billion in dividends paid out to shareholders in 2008, a drop of 27.7 percent, from the $32.2 billion paid out in dividends in 2007.

There was an addition to surplus in 2008 of $0.3 billion in miscellaneous additions. This may be compared to the $1.2 billion in miscellaneous charges against surplus reported for 2007.

Results for the Fourth-Quarter
During the fourth quarter of 2008, the insurance industry suffered a $1.7 billion net after tax loss which represented a negative swing of $14.6 billion as compared with the industry’s $12.9 billion in net after tax income for the fourth quarter of 2007. Insurers’ annualized rate of return dropped to a negative 1.4 percent during the fourth quarter of 2008 from 9.9 percent reported a year earlier. This is a reflection of the net after tax loss.

Insurers’ annualized fourth-quarter rate of return fell to 4.3 percent in 2008 from 13.1 percent in 2007, excluding mortgage and financial guaranty insurers, while net income dropped 70.3 percent.

As a portion of the industry’s net loss for the fourth quarter of 2008, $11 billion in pretax operating income is counted, minus the $10.1 billion in realized capital losses on investments and the $2.6 billion in federal and foreign income taxes.