Against the odds. (Editor's Prologue).

Despite an operating environment in 2002 that was as difficult for insurers as it has been for decades, many companies were able to move ahead of the competition. Life insurers faced the lowest interest rates in years; lower separate-account assets under management, reducing fee income, and the need for additional reserves to back guaranteed minimum death benefits in variable annuities, to name a few obstacles.

Property/casualty insurers had to overcome catastrophe losses; difficult regulatory environments, particularly for personal automobile and medical liability writers; medical cost inflation and staggering jury awards, among other hurdles.

The 200 life writers who finished 2002 in front are named on pages 30 and 32; the top 200 property/casualty writers are on pages 34 and 36.

The underlying reason that some insurers were successful in 2002 was that in that year and before, they priced right, said Michael Weinstein, director of research, Conning Research & Consulting. Insurers who consistently underwrite each risk take external factors in stride. "The decline in the equity markets has been overplayed in the plight of the insurance industry," Weinstein said. "Insurers who were unsuccessful in 2002 were unsuccessful because of bad pricing decisions."

Successful insurers also ran a holistic business model, Weinstein said. They had the marketing and sales people talking to the underwriters and claims people. "The costs that were in their control--such as loss adjustment expenses--they kept low," he said. And, they recognized that return on capital is more important than growth.

Doing everything right in the life industry or the property/casualty industry is difficult enough. Three insurers, however, managed to do things right in both industries and placed in the top 10 in both categories. A look at the strategies and philosophies that set apart these three--Hartford, Nationwide and American International Group--begins on page 20.

With 2003 half over, are Weinstein's steps to success working this year? These strategies work in any year, he said.

Sally Whitney is editor. You may reach her at [phone], Ext. 5340, by writing to A.M. Best Co., Ambest Road, Oldwick, NJ 08858, or by e-mail at [e-mail]. e-mail address for Best's Review is [e-mail].