US Policyholder Surplus vs Combined Ratio at 2011 3Q

The graphic below updates the basic data for the U.S. P & C Industry through the end of the 3^rd quarter, 2011.  While there have been no real dramatic changes from the end of the 2^nd quarter, that in and of itself is noteworthy.  That is because the 3^rd quarter is often a time of healing for the industry but this year that didn’t happen.  Most indicators have deteriorated a bit or remained about the same which is a direct reflection of the large amount of catastrophe losses of the last several months, the fact that investment returns continue at a reduced level and that reserve releases continue to drop from prior periods.  On the positive side premium growth has been positive, up 3.1% for the first 9 months of the year. Policyholders surplus has dropped some $20.5 billion, the combined ratio has remained about steady at 109.9% and while the premium to surplus ratio remains well below 1 to 1 at 0.8 to 1, that’s up from 0.78 to 1 as of June 30.  Will be most interesting to see what the yearend figures will look like.

- Jerry Sullivan

3rd Quarter (2011) Cash Flow

These graphics present cash flow for U.S. Property & Casualty Insurers updated through the end of 3^rd quarter, 2011.  Very interesting results.  Operations have generated a positive cash flow a bit below the quarterly average for the last 11 months, which is an improvement from the 1^st and 2^nd quarters of this year.  Investments turned in a massive negative cash flow, almost 3 times the average of the last 11 quarters while cash from Financing dropped to a negative figure some 30% worse than the average of the last 11 quarters. 

Thus net cash flow for the industry for the quarter, the really important measure to watch, dropped to a negative figure almost 8 times greater than the average for the last 11 quarters.  For this entire period of time (2009 through 3^rd quarter 2011) the industry has had a negative cash flow of almost $25.5 billion of which $16.5 billion occurred this last quarter.  This will add significant pressure to change the market’s direction. 

- Jerry Sullivan

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