US P/C SECTOR POSTS 5.5% DROP IN Q1 INCOME

US p/c insurers saw combined Q1 net earnings fall by 5.5% to $15.8bn, reflecting a 1.2% drop in underwriting income to $8.3bn and a drop in net written premium growth to 0.8% from 1.8% in Q1 2006, according to figures compiled by the Insurance Services Office and the Property Casualty Insurers Association of America. Those figures aside, the drop in earnings also reflected a March 30 transaction in which Berkshire Hathaway’s National Indemnity unit assumed $9.3bn in liabilities from Lloyd’s run-off vehicle Equitas in exchange for $7.1bn in premiums, the ISO and PCI said. The industry’s rate of return on average surplus fell to 12.9% from 15.5%, which “provided confirmation that the industry is now past it cyclical peak in profitability of 14% achieved in 2006”, said Robert Hartwig, president and chief economist of the Insurance Information Institute. The industry’s combined ratio deteriorated to 91.7% from 91.1% a year earlier.