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Property insurers' net fell in first half of year.

The U.S. property-casualty insurance industry's net income after taxes fell 9.3 percent to $28.3 billion in first-half 2006 from $31.2 billion in first-half 2005 as investment results deteriorated.

The industry's annualized rate of return on average surplus (net worth) fell to 13 percent in first-half 2006, compared with 15.6 percent in first-half 2005, according to the ISO, a Jersey City, N.J. company that tracks insurance data, and the trade group Property Casualty Insurers Association of America.

The main factor in the profit decline was the industry's net investment income, primarily dividends from stocks and interest on bonds, which dropped 3.5 percent to $24.5 billion in the first half of the year from $25.4 billion in the first half of 2005. Realized capital gains also fell.

The industry also incurred $12.3 billion in federal income taxes in first-half 2006--20.3 percent more than the $10.2 billion in income taxes the industry incurred in first-half 2005.

Insurers did post net gains on underwriting, which increased to $15.1 billion in first-half 2006 from $12.8 billion in first-half 2005. The combined ratio--a key measure of losses and other underwriting expenses per dollar of premium--improved 1 percent to 92 percent in the first half of 2006 from 93 percent in the first half of 2005.

"While the hurricane season isn't over and the potential for catastrophic losses from a natural disaster still remains, insurers' underwriting results for the first half of 2006 were very solid," said Genio Staranczak, chief economist with the PCI Association.

The property-casualty insurance industry's consolidated surplus, or statutory net worth, increased 4.6 percent to $445.5 billion on June 30 from $425.8 billion at year's end.

The $12.8 billion in dividends to shareholders in first-half 2006 is up from $7.7 billion in first-half 2005.

Catastrophes caused $5.3 billion in insured property losses in first-half 2006, up 71.8 percent from $3.1 billion in first-half 2005, according to ISO's Property Claim Services unit.

Net written premiums climbed $6.4 billion to $223.3 billion in first-half 2006 from $216.9 billion in first-half 2005, with written premium growth accelerating to 2.9 percent in first-half 2006 from 2.2 percent in first-half 2005.

Net earned premiums rose $5.7 billion to $215 billion in first-half 2006 from $209.3 billion in first-half 2005, but earned premium growth stowed to 2.7 percent in first-half 2006 from 3.2 percent in first-half 2005. At 2.7 percent, first-half earned premium growth had slowed to its slowest pace since 1999, when earned premiums grew 0.9 percent.
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Title Annotation:Notes
Publication:Arkansas Business
Date:Oct 9, 2006
Words:442
Previous Article:Largest property & casualty insurance companies.
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