US property-casualty assets drop.While 2008 was anticipated to be a difficult year, few predicted the magnitude of the economic crisis and its impact on the U.S. property/casualty industry, as most companies experienced sharp declines in the value of their investment portfolios. The industry's net income deteriorated 94.4% to $3.7 billion in 2008, down from a net gain of $65.6 billion in 2007. This year-over-year decline in earnings was due primarily to the severe and prolonged turmoil in the financial markets and the subsequent impact on the industry's investment earnings. Although U.S. property/casualty insurers tend to take very little investment-related risk, since their balance sheets already are risk-inherent, the industry's sizable realized and unrealized investment losses of $75.9 billion and decreased net investment income contributed to an 11.7% decline in policyholder surplus in 2008.The U.S. property/casualty industry generally stayed the course during 2008 by continuing to invest conservatively and remaining well-diversified. However, with investment portfolios being impacted by sharp equity declines, high volatility and increased credit spreads on corporate bonds, the U.S. property/casualty industry's asset allocation has been modified to an even more conservative position, with insurers increasing their fixed income holdings, cash and short term investments while reducing their equity positions. At year-end 2008, the industry's invested assets decreased $86.7 billion, or 6.4%, to $1.26 trillion from $1.35 trillion at year-end 2007. Long-term fixed income securities represented 68% of total invested assets, up from 65.5% in 2007; while equity securities represented 11% of total invested assets, down from 14.3% in 2007. Cash and short-term investments increased to 8.2% of total invested assets, up from 7.4% in 2007, as insurers built up larger cash and cash equivalent assets in response to the turmoil in the financial markets. Consequently, the industry's cash and short-term investments increased to 8.2% of total invested assets, up from 7.4% in 2007. --Edward Keane, A.M Best Senior Financial Analyst
U.S. Property/Casualty--2008 Asset Distribution
Ranked by 2008 total admitted assets.
($ Millions)
Nonaffiliated
Common % of
Rank Company Name AMB# Stocks Assets
1 Amer Intl Group 18540 $2,828 2.3
2 State Farm Group 00088 30,375 26.1
3 Berkshire Hathaway Ins 00811 40,286 35.3
4 Travelers Group 18674 254 0.3
5 Liberty Mutual Ins Cos 00060 762 1.2
6 Allstate Ins Group 00008 2,454 5.8
7 CNA Ins Cos 18313 319 0.8
8 Nationwide Group 05987 144 0.4
9 Hartford Ins Group 00048 197 0.5
10 Chubb Group of Ins Cos 00012 944 2.6
11 Zurich Finl Svcs NA Group 18549 828 2.7
12 Farmers Ins Group 00032 655 2.5
13 USAAGroup 04080 1,025 4.3
14 Swiss Reins Group 03262 16 0.1
15 Ace INA Group 18498 503 2.3
16 State Comp Ins Fund CA 04028 0 0.0
17 Munich-Amer Hldg Corp 18753 102 0.5
18 Progressive Ins Group 00780 725 4.1
19 Allianz of America 18429 268 1.7
20 Fairfax Financial (USA) 03116 2,792 19.7
Group
21 State Ins Fund of NY 04029 904 6.4
22 W.R. Berkley Group 04655 77 0.5
23 MBIA Group 03166 49 0.4
24 Auto-Owners Ins Group 04354 1,215 10.2
25 Ambac Finl Group 18449 0 0.0
Top 25 Writers $87,722 9.1
Total U.S. P/C Industry $120,514 8.1
Affiliated Cash &
Bonds & % of Short-Term
Rank Company Name Stocks Assets Investments
1 Amer Intl Group 6,993 5.8 5,636
2 State Farm Group 8,914 7.7 1,368
3 Berkshire Hathaway Ins 15,199 13.3 13,763
4 Travelers Group 1,016 1.4 1,946
5 Liberty Mutual Ins Cos 2,275 3.7 3,633
6 Allstate Ins Group 3,392 8.0 1,357
7 CNA Ins Cos 952 2.3 2,592
8 Nationwide Group 3,670 9.0 3,095
9 Hartford Ins Group 7,648 18.9 1,565
10 Chubb Group of Ins Cos 4,678 12.8 364
11 Zurich Finl Svcs NA Group 60 0.2 348
12 Farmers Ins Group 275 1.0 2,275
13 USAAGroup 4,322 18.1 1,345
14 Swiss Reins Group 19 0.1 1,414
15 Ace INA Group 106 0.5 970
16 State Comp Ins Fund CA 0 0.0 1,540
17 Munich-Amer Hldg Corp 5 0.0 931
18 Progressive Ins Group 357 2.0 990
19 Allianz of America 0 0.0 -9
20 Fairfax Financial (USA) 367 2.6 2,877
Group
21 State Ins Fund of NY 0 0.0 77
22 W.R. Berkley Group 382 2.7 769
23 MBIA Group 393 2.9 5,442
24 Auto-Owners Ins Group 248 2.1 126
25 Ambac Finl Group 82 0.8 1,214
Top 25 Writers 61,351 6.3 55,629
Total U.S. P/C Industry 69,343 4.6 103,517
Total
% of Admitted
Rank Company Name Assets Assets
1 Amer Intl Group 4.7 120,794
2 State Farm Group 1.2 116,442
3 Berkshire Hathaway Ins 12.1 114,138
4 Travelers Group 2.6 75,139
5 Liberty Mutual Ins Cos 5.9 61,888
6 Allstate Ins Group 3.2 42,302
7 CNA Ins Cos 6.1 42,298
8 Nationwide Group 7.6 40,834
9 Hartford Ins Group 3.9 40,468
10 Chubb Group of Ins Cos 1.0 36,587
11 Zurich Finl Svcs NA Group 1.1 30,428
12 Farmers Ins Group 8.7 26,257
13 USAA Group 5.6 23,835
14 Swiss Reins Group 6.1 23,038
15 Ace INA Group 4.5 21,582
16 State Comp Ins Fund CA 7.3 21,105
17 Munich-Amer Hldg Corp 5.0 18,628
18 Progressive Ins Group 5.6 17,707
19 Allianz of America -0.1 15,580
20 Fairfax Financial (USA) 20.3 14,201
Group
21 State Ins Fund of NY 0.5 14,121
22 W.R. Berkley Group 5.5 14,100
23 MBIA Group 40.2 13,536
24 Auto-Owners Ins Group 1.1 11,878
25 Ambac Finl Group 11.2 10,808
Top 25 Writers 5.7 967,693
Total U.S. P/C Industry 6.9 1,496,733
Gross geld on
Invested Assets
Rank Company Name 2008 2007 2006
1 Amer Intl Group 4.6 5.1 4.7
2 State Farm Group 4.1 4.2 4.5
3 Berkshire Hathaway Ins 4.3 4.4 5.0
4 Travelers Group 5.8 5.7 5.3
5 Liberty Mutual Ins Cos 5.8 5.4 5.4
6 Allstate Ins Group 4.5 6.5 6.5
7 CNA Ins Cos 5.4 6.1 5.4
8 Nationwide Group 3.6 4.9 5.4
9 Hartford Ins Group 5.5 5.6 5.7
10 Chubb Group of Ins Cos 4.0 4.1 4.0
11 Zurich Finl Svcs NA Group 4.8 4.8 4.8
12 Farmers Ins Group 4.3 4.7 4.4
13 USAA Group 4.4 5.9 6.0
14 Swiss Reins Group 4.7 5.7 6.4
15 Ace INA Group 5.0 5.1 5.1
16 State Comp Ins Fund CA 5.1 5.2 4.9
17 Munich-Amer Hldg Corp 4.5 5.0 4.8
18 Progressive Ins Group 4.6 4.7 4.5
19 Allianz of America 5.4 5.5 6.2
20 Fairfax Financial (USA) 3.7 3.9 4.6
Group
21 State Ins Fund of NY 4.8 5.1 5.0
22 W.R. Berkley Group 4.4 4.6 4.5
23 MBIA Group 4.4 4.5 4.9
24 Auto-Owners Ins Group 4.4 4.5 4.5
25 Ambac Finl Group 4.6 4.8 6.0
Top 25 Writers 4.7 5.0 5.1
Total U.S. P/C Industry 4.6 4.9 5.0
Source: Best's Statement File--P/C, US. Data as of Aug. 26, 2009
Note: Ratios of 999.9 and -99.9 are maximum and minimum values,
respectively
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