These two graphics present the P & C Industry’s cash
flow picture through the first quarter of this year and show a very interesting
picture. The most important positive is
that cash flow from operations has continued to improve since June 2011 which
in turn has been offset to some extent by negative cash flow from investment
activities. The improvement in cash flow
from operations is a direct reflection of some up-tick in rates generally as
well as a significantly better picture as respects catastrophes here in the
U.S., at least through the end of the first quarter. The deterioration from investment activities
was offset largely by other financing activities.
Quarterly Cash Flow Graphs as of 8-15-12
Thus the overall cash flow picture as set out in the second
graph shows a material improvement since third quarter of last year but the
industry still finished the first quarter this year with a modest overall
negative cash flow. It is this
improvement in the cash flow picture as well as the very positive increase in
policyholder’s surplus ($571 Billion as of March 31, 2012 – a record high) that
is responsible for what is only a modest market tightening despite other
industry metrics.
- Jerry Sullivan
nice post
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