Following the market: improved equity market performance boosts property/casualty company assets.

The property/casualty insurance industry recorded almost a 13% increase in total admitted assets, primarily reflective of improved stock market performance and the resulting greater appreciation of common stock portfolios. However, the continued low-interest rate environment during the year drove a 0.5 percentage point decline in gross investment yield.

The increase in total admitted assets nearly doubled last year's increase, primarily because of better equity market performance compared with 2002, while the decline in gross yield followed a period of declining to stagnant results for the overall industry.

The most prominent shift in distribution of assets was derived from nonaffiliated common stocks, where the value of this asset category relative to total admitted assets increased by more than 1 percentage point compared to last year. In addition, the value of cash and short-term investments increased by over 20% compared to last year, making it the greatest margin increase among all asset categories. The trends in common stock investments and cash and short-term investments were not matched by similar trends in the nonaffiliated bond category. Although the value of this asset class increased by approximately 13%, the percent to total admitted assets remained virtually flat compared with last year.

Asset Distribution, Top Property/Casualty Writers, United States--2003

Rank is based on total admitted assets for 2003.

($ Millions)

                                                      Nonaffiliated
Rank    Group Name                           AMB#             Bonds

   1    State Farm Group                     00088          $43,446
   2    Berkshire Hathaway Ins Group         00811            9,740
   3    Amer Intl Group, Inc                 18540           36,742
   4    Allstate Ins Group                   00008           28,877
   5    Travelers P&C Group                  18358           30,968
   6    Zurich/Farmers Group                 18549           25,934
   7    CNA Ins Cos                          18313           20,875
   8    Liberty Mutual Ins Cos               00060           22,510
   9    Hartford Ins Group                   00048           21,029
  10    Nationwide Group                     05987           13,996
  11    Chubb Group of Ins Cos               00012           16,864
  12    St. Paul Cos                         00080           14,369
  13    GE Global Ins Group                  18572           14,612
  14    Progressive Ins Group                00780            8,738
  15    Amer Re Corp Group                   18259           10,887
  16    USAA Group                           04080            6,028
  17    State Compensation Ins Fund of CA    04028           12,639
  18    Allianz of America, Inc              18429            8,796
  19    Ace INA Group                        18498            6,900
  20    Swiss Reins Group                    03262            6,407
  21    Fairfax Finl Hldgs Ltd               03116            3,277
  22    Safeco Ins Cos                       00078            7,443
  23    MBIA Group                           03166            8,093
  24    White Mountains Ins Group            18490            5,939
  25    Royal & SunAlliance USA              18371            3,672
        Total Top 25 P/C Writers                           $388,784
        Total U.S. P/C Industry                            $642,839

                  Affiliated                   Cash &
          % of       Bonds &      % of     Short-Term      % of
Rank    Assets        Stocks    Assets    Investments    Assets

   1      44.6        $5,317       5.5         $1,314       1.3
   2      10.6         5,240       5.7         26,835      29.1
   3      49.1         6,300       8.4            816       1.1
   4      64.7         3,884       8.7             22       0.0
   5      71.4           949       2.2          1,316       3.0
   6      66.9           619       1.6            694       1.8
   7      54.4         1,032       2.7          6,369      16.6
   8      61.1         1,309       3.6          1,221       3.3
   9      66.7         3,552      11.3          1,155       3.7
  10      44.7         3,176      10.1            530       1.7
  11      64.0         1,947       7.4          1,513       5.7
  12      61.8           630       2.7            715       3.1
  13      65.4         2,951      13.2            950       4.3
  14      53.0           399       2.4            298       1.8
  15      66.6             2       0.0            997       6.1
  16      37.6         2,106      13.1          2,670      16.6
  17      82.7             0       0.0          1,153       7.5
  18      60.0         1,924      13.1            644       4.4
  19      58.8           104       0.9            453       3.9
  20      57.8             2       0.0          2,448      22.1
  21      30.2           486       4.5          3,983      36.8
  22      72.4            27       0.3            -13      -0.1
  23      81.0            94       0.9            919       9.2
  24      61.2           364       3.7            842       8.7
  25      40.9            32       0.4          3,004      33.5
          51.6       $42,446       5.6        $60,850       8.1
          54.7       $51,739       4.4        $89,298       7.6

                         Gross Yield on
             Total      Invested Assets
          Admitted
Rank        Assets    2003    2002    2001

   1       $97,518     4.9     5.1     4.8
   2        92,323     4.7     4.5     4.0
   3        74,814     5.0     4.6     5.7
   4        44,632     5.5     5.6     6.2
   5        43,367     5.0     5.4     6.5
   6        38,739     4.4     5.2     5.8
   7        38,394     6.3     7.5     5.3
   8        36,835     6.5     7.0     6.1
   9        31,537     8.3     6.8     6.1
  10        31,311     5.8     5.1     5.0
  11        26,347     4.6     5.1     5.6
  12        23,243     7.1     6.5     6.7
  13        22,337     7.2    15.0     4.4
  14        16,480     4.1     5.1     5.9
  15        16,337     4.6     5.2     5.8
  16        16,051     5.4     6.6     7.0
  17        15,287     4.5     5.8     6.9
  18        14,660     5.0     4.7     4.5
  19        11,730     4.4     4.7     5.2
  20        11,076     3.4     4.5     5.7
  21        10,836     3.5     5.1     6.4
  22        10,276     5.6     5.9     5.9
  23         9,993     4.6     5.2     5.7
  24         9,708     4.1     4.3     5.3
  25         8,981     3.9     5.3     5.5
          $752,813     5.3     5.7     5.4
        $1,174,328     5.0     5.5     5.5

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Source: A.M. Best Co. data.