The two graphics below present the annual cash flow for the last 8 years for the U.S. P & C industry. The first graphic sets out the detail of cash flow from operations, investments and financing. The second graphic sets out the net cash flow which has been negative for 4 of the last 8 years and is clearly a deteriorating picture.
The detail presented in the first graphic shows that the decrease in cash flow from investments in 2011 was largely offset by a somewhat improved cash flow from financing activities. The result is that the overall negative cash flow suffered by the industry in 2011 came almost entirely from operations. This a key factor that is moving the industry towards an ever tightening market.
- Jerry Sullivan