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Property/casualty insurers post $1.31B quarterly loss

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The property/casualty insurance industry posted a 102.2% combined ratio after dividends for the first quarter of 2009, compared with a 99.9% combined ratio for the comparable period a year ago, according to industry data.

Insurers posted an aftertax net loss of $1.31 billion in the quarter ended March 31, compared with $8.49 billion in net income for the same period a year ago, according to the report issued Monday by the Jersey City, N.J.-based Insurance Services Office Inc., the Des Plaines, Ill.-based Property Casualty Insurers Assn. of America and the New York-based Insurance Information Institute. Insurers reported $16.4 billion in unrealized capital losses on investments for this year’s first quarter, which are not included in net income.

The results are consolidated estimates for all private U.S. property/casualty insurers based on reports accounting for at least 96% of all businesses written by these insurers.

The quarterly net loss reflects a combination of underwriting losses and deterioration in investment results, the report notes.

“Property/casualty insurers absorbed a pounding in first-quarter 2009, as the recession deepened and stock markets tumbled,” Michael R. Murray, ISO’s assistant vp for financial analysis, said in a statement. “Based on quarterly data extending back to 1986, insurers’ $1.3 billion net loss after taxes for the first three months of this year is the worst first quarter on record.”

Net written premiums dropped 3.6% to $106.38 billion for the quarter.

“Market surveys and U.S. government data indicate that declining demand and declines in the price of commercial insurance cut into premiums,” Mr. Murray said.

Policyholder surplus decreased 15%, to $437.10 billion, from 2008’s first quarter.

But despite the decline in policyholder surplus, “leverage ratios suggest that insurers remained strongly capitalized,” the report notes.