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First-half profits for insurers down 57.4%

First-half profits for insurers down 57.4%

Posted On: Sept. 30, 2008 2:56 PM CST

The U.S. property/casualty insurance industry's aftertax profits fell 57.4% to $13.9 billion during the first six months of 2008 compared with the same period last year, the Insurance Services Office Inc. and the Property Casualty Insurers Assn. of America reported Tuesday.

Net written premiums dropped 0.6% to $221.9 billion in the first six months of the year. Policyholder surplus decreased nearly 2.5% to an estimated $505 billion as of June 30.

Insurers were battered by both underwriting losses and a decrease in investment income. Underwriting losses reached $5.6 billion during the first half of this year compared with $14.5 billion in net underwriting gains during the same period a year earlier. Insurers' net investment gains—the combination of net investment income and realized capital gains or losses—fell 18.4% to $24.8 billion in the first half of the year, and the combined ratio deteriorated more than nine points to 102.1%.

"The sharp decline in profitability is primarily attributable to a spillover of the housing and credit bubble collapse into the mortgage and financial guarantee segments of the property/casualty insurance industry," said Robert P. Hartwig, president of the New York-based Insurance Information Institute, in an analysis accompanying the report.

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