The steep rise in net gain from operations was due to a greater decrease in premiums written, 16 percent, than in benefits paid, 14 percent, over the course of the year. This also drove life insurers' return on equity to a five-year high of 15.2 percent.
The absence of major catastrophes during the year gave property and casualty insurers their biggest decline in net losses incurred, 11.3 percent in the past ten years.
These findings demonstrate that the industry as a whole has regained a considerable amount of ground lost during the economic crisis, but not all of it. Insurers entered 2010 in better shape than they did 2009, but were still behind where they were in recent years on many key measures.
- Despite their impressive gains in 2009, the $35 billion in net income for property and casualty insurers was still less than half that seen in 2006, $73.2 billion.
- The combined ratio for the property and casualty industry, while down to 101.3% from last year's high of 105.1%, is still above the break even point. The combined ratio measures how well a company is performing its daily operations by combining the loss and expense ratios. Because the ratio was above 100%, the industry as a whole suffered an underwriting loss in 2009.
- Driven in part by the continued pressure on interest rates in equity markets, net investment income for life insurers hit a five-year low of $154.5 billion at year's end. Net yield likewise hit a five-year low of 5.1 percent.
"Being the first to deliver annual statement data to the industry once again, we at Highline Data continue to give our customers an edge in the marketplace," Laurie Dallaire, vice president and director of Highline Data, said. "Our findings suggest that property and casualty companies will continue to strive to contain expenses and further reduce their combined ratios while life companies will continue to rebuild capital and improve investment yields this year."
