SNL Financial's Statutory Insurance Data Shows Underwriting Losses Doubling in the Third Quarter of 2008

Destructive natural catastrophes and tightening market conditions create a perfect storm for Property & Casualty companies.

Charlottesville, Va. (November 21, 2008) - According to third quarter 2008 statutory insurance financial results recently made available by SNL Financial, underwriting losses were approximately $11.2 billion, more than double last quarter's loss of $4.5 billion. This figure is based on data reported by 91% of expected filers, representing more than 2,500 individual entities. According to SNL data, underwriting losses of this magnitude have not been seen since third quarter 2005, when hurricanes Katrina and Rita brought devastating losses of $10.7 billion for these same companies.

Natural catastrophes once again bear part of the blame for third quarter losses. Early indication from the Insurance Services Office's Property Claim Services division suggests catastrophe losses could total $11.5 billion this quarter, a slightly above average quarterly loss when looking at the last decade. In a volatile hurricane season marked by the destruction of Gustav and Ike, the P&C industry took a hit this quarter after third quarter underwriting profits in 2006 and 2007.

Compounding the poor underwriting results were tough bond and stock market conditions, with 29 companies reporting realized capital losses of $50 million or more. The worst result was reported by Ambac Assurance Corporation at $2.1 billion.

"What is especially notable about third quarter 2008 is that underwriting losses were reported by each of the Personal Lines, Commercial Lines and Reinsurance sectors," said Jon Wright, Associate Director of Insurance Research at SNL. "The effects of the soft market on commercial lines companies are becoming very clear with these companies now reporting both premium declines and underwriting losses."

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