BC-INSURANCE-SALES-PLUNGE-UPDATE1
U.S. Insurers Post Biggest Sales Decline in 23 Years (Update1)
c.2009 Bloomberg News
(Adds AIG, Travelers in fifth paragraph.)
Dec. 22 (Bloomberg) -- U.S. property and casualty insurance sales plunged 5 percent in the third quarter, the biggest drop since at least 1986, on lower prices and reduced demand.
Policy sales in the three months ended Sept. 30 fell to $108.4 billion from $114.1 billion in the year-earlier period, Verisk Analytics Inc. said today in an e-mailed statement. The previous record was the 4.8 percent slump in the second quarter.
Layoffs at manufacturing and construction companies weighed on demand for workers' compensation coverage, and individuals who feared losing their jobs spent less insuring their homes and cars. The U.S. lost more than 7 million jobs in the past two years as banks limited lending for businesses and homebuyers.
"Written premiums have now declined versus year-ago levels for 10 successive quarters," said David Sampson, president of the Property Casualty Insurers Association of America, in the statement. He blamed the recession and "increasingly intense competition in many insurance markets."
American International Group Inc., the insurer bailed out by the U.S., said property-casualty premiums fell 13 percent to $8.1 billion in the quarter as clients scaled back and rivals poached staff and customers. Travelers Cos., the insurer added to the Dow Jones Industrial Average, said policy sales fell 2.6 percent from last year's third quarter to $5.34 billion.
Net Income
The industry posted net income of $10.4 billion compared with a loss of about $9.8 billion a year earlier on lower hurricane claims. Only one named system, Tropical Storm Claudette, touched the U.S. this in this year's Atlantic season. In 2008, hurricanes Dolly, Gustav and Ike contributed to more than $20 billion in catastrophe losses.
Property-casualty insurers spent 100.5 cents for every premium dollar on claims and expenses, compared with 112.3 cents a year earlier. The industry was profitable because of investments, including about $12.3 billion in returns from holdings such as stocks and bonds.
Verisk began tracking quarterly sales in 1986. The Jersey City, New Jersey-based supplier of actuarial date became a publicly traded company in October in the largest U.S. IPO since Visa Inc. in 2008.
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