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P/C industry posts puzzling financials.

The consolidated net income after tax for the U.S. property/casualty insurance industry decreased 9.4 percent in 1990 to $11.1 billion, down from 1989's $12.2 billion. In addition, the industry paid 17.6 percent more in income tax over 1989's $2.8 billion, amounting to $3.3 billion, according to the Insurance Services Office Inc. and the National Association of Independent Insurers.

Net income in 1990 included $11.5 billion of operating income--an increase of 11.3 percent from $10.4 billion in 1989--and $2.8 billion of realized capital gains. However, the industry's underwriting loss of $20.9 billion in 1990 increased 6.4 percent from a loss of $19.6 billion during the same period in 1989.

On the surface, the financial results for the industry in 1990 present several contradictions, says Sean Mooney, senior vice president and economist at the Insurance Information Institute. for example, net income after tax, the fundamental indicator of the industry's financial well-being, dropped 9.4 percent. Another indicator of financial health, the combined ratio, rose only 0.2 percentage points from 109.2 percent in 1989 to 109.4 in 1990.

Mr. Mooney adds that the industry's 8 percent rate of return of return on capital is down from 9.1 percent in 1989, well below the 15 percent rate of return for the Fortune 500 in 1989.
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Title Annotation:In the Market; property/casualty insurance
Author:Oshins, Alice H.
Publication:Risk Management
Date:May 1, 1991
Words:230
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