Industry Overview
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INSURANCE INDUSTRY AT A GLANCE
- World insurance premiums (life and nonlife) totaled $4.1 trillion in 2007, according to Swiss Re.
- There were 747 mergers and acquisitions in the global insurance industry in 2007, with a reported value of $138 billion, according to Conning Research and Consulting.
- Property/casualty (P/C) insurance net written premiums declined by $2.7 billion, or 0.6 percent in 2007, following a 4.2 percent increase in 2006, according to ISO. The 2007 decline was the first since 1943.
- During the same period, life/health (L/H) insurance premiums written increased by 5.7 percent, based on data from Highline/National Association of Insurance Commissioners.
- There were 2,723 P/C insurance companies and 1,190 L/H insurance companies in the U.S. in 2007. Total P/C cash and invested assets were $1.3 trillion in 2007. L/H cash and invested assets totaled $3 trillion in 2007. The P/C insurance industry's rate of return on a statutory basis dropped from 13.3 percent in 2006 to 11.9 in 2007. The L/H insurance industry's rate of return on a GAAP basis dropped from 12 percent in 2006 to 11 percent in 2007.
- The U.S. P/C industry posted a $19.0 billion net gain on underwriting in 2007, down from $31.1 billion in 2006, reflecting a weakness in premiums and increases in the cost of providing insurance protection, according to ISO.
- Catastrophe losses dropped from $9.5 billion in 2006 to $6.7 billion in 2007. By contrast, losses surged in 2008, reaching $22.1 billion in the first three quarters.
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PREMIUMS OF PROPERTY/CASUALTY AND LIFE/HEALTH
INSURANCE INDUSTRIES, 1998-2007
($ billions, excludes state funds)
(1) Includes deposit-type funds beginning in 2001.
Source: National Association of Insurance Commissioners (NAIC) Annual Statement Database, via Highline Data, LLC. Copyrighted information. No portion of this work may be copied or redistributed without the express written permission of Highline Data, LLC.
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EMPLOYMENT IN INSURANCE, 1998-2007
(Annual averages, 000)
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Insurance carriers |
Insurance agencies, brokerages and related services |
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Direct insurers (1) |
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Year |
Life, health and medical |
Property/ casualty |
Reinsurers |
Total |
Insurance agencies and brokers |
Other insurance- related activities (2) |
Total |
Total industry |
Insurance and employee benefit funds (3) |
| 1998 | 816.8 | 592.0 | 34.3 | 1,443.1 | 574.9 | 191.5 | 766.3 | 2,209.4 | 41.4 |
| 1999 | 815.3 | 603.9 | 33.5 | 1,452.7 | 585.3 | 198.1 | 783.4 | 2,236.1 | 44.9 |
| 2000 | 808.8 | 591.6 | 32.3 | 1,432.7 | 587.5 | 200.3 | 787.8 | 2,220.6 | 46.4 |
| 2001 | 807.7 | 591.3 | 31.4 | 1,430.4 | 597.9 | 205.3 | 803.2 | 2,233.7 | 48.4 |
| 2002 | 791.1 | 590.0 | 31.7 | 1,412.8 | 616.0 | 204.4 | 820.4 | 2,233.2 | 47.2 |
| 2003 | 789.0 | 608.6 | 31.0 | 1,428.6 | 628.5 | 208.9 | 837.4 | 2,266.0 | 47.1 |
| 2004 | 764.4 | 604.4 | 29.8 | 1,398.6 | 643.3 | 216.8 | 860.1 | 2,258.6 | 47.0 |
| 2005 | 761.9 | 595.0 | 28.8 | 1,385.7 | 650.1 | 223.5 | 873.6 | 2,259.3 | 46.4 |
| 2006 | 787.4 | 597.4 | 28.0 | 1,412.8 | 659.9 | 230.9 | 890.8 | 2,303.7 | 47.8 |
| 2007 | 782.3 | 588.6 | 27.7 | 1,398.6 | 676.6 | 232.9 | 909.5 | 2,308.1 | 47.7 |
(1) Establishments primarily engaged in initially underwriting insurance policies.
(2) Includes claims adjusters, third-party administrators of insurance funds and other service personnel such as advisory and insurance ratemaking services.
(3) Includes employees of legal entities organized to provide insurance and employee benefits exclusively for the sponsor, or its employees or members. These employees are not included in the total for the insurance industry.
Source: U.S. Department of Labor, Bureau of Labor Statistics. |
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POLICYHOLDERS' SURPLUS
A property/casualty insurer must maintain a certain level of surplus to underwrite risks. This financial cushion is known as “capacity.” When the industry is hit by high losses, such as a major hurricane, capacity is diminished. It can be restored by increases in net income, favorable investment returns, reinsuring more risk, and/or raising additional capital.
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PROPERTY/CASUALTY INSURANCE INDUSTRY INCOME ANALYSIS, 2003-2007 (1)
($ billions)
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2003 |
2004 |
2005 |
2006 |
2007 |
| Net written premiums | $404.4 | $424.1 | $425.5 | $443.5 | $440.8 |
| Percent change | 9.4% | 4.9% | 0.3% | 4.2% | -0.6% |
| Earned premiums | $386.3 | $413.8 | $417.6 | $435.5 | $439.1 |
| Losses incurred | 238.7 | 247.8 | 256.5 | 231.3 | 246.2 |
| Loss adjustment expenses incurred | 50.0 | 53.1 | 55.1 | 52.6 | 52.4 |
| Other underwriting expenses | 100.7 | 106.8 | 109.8 | 117.1 | 119.0 |
| Policyholder dividends | 1.9 | 1.7 | 1.9 | 3.4 | 2.4 |
| Underwriting gain/loss | -4.9 | 4.3 | -5.6 | 31.1 | 19.0 |
| Investment income | 38.6 | 40.0 | 49.7 | 52.3 | 54.6 |
| Miscellaneous income/loss | 0.0 | -0.3 | 1.0 | 1.2 | -1.0 |
| Operating income/loss | 33.8 | 44.0 | 45.1 | 84.6 | 72.7 |
| Realized capital gains/losses | 6.6 | 9.1 | 9.7 | 3.5 | 9.0 |
| Incurred federal income taxes/credit | 10.3 | 14.6 | 10.7 | 22.4 | 19.7 |
| Net income after taxes | 30.0 | 38.5 | 44.2 | 65.8 | 61.9 |
(1) Data in this chart may not agree with similar data shown elsewhere due to different sources.
Source: ISO. |
| - The U.S. property/casualty industry posted a $19.0 billion net gain on underwriting in 2007, down $12.1 billion from a $31.1 billion gain in 2006, reflecting a weakness in premiums and increases in the cost of providing insurance protection, according to ISO.
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TOP TEN WRITERS OF PROPERTY/CASUALTY INSURANCE
BY DIRECT PREMIUMS WRITTEN, 2007
($000)
Rank |
Group |
Direct premiums written (1) |
Market share (2) |
| 1 | State Farm Group | $49,350,411 | 9.9% |
| 2 | American International Group (AIG) (3) | 37,665,191 | 7.5 |
| 3 | Zurich Insurance Group | 29,108,738 | 5.8 |
| 4 | Allstate Insurance Group | 27,688,687 | 5.5 |
| 5 | Travelers Group | 22,151,582 | 4.4 |
| 6 | Liberty Mutual Insurance Group | 20,235,814 | 4.1 |
| 7 | Nationwide Group | 16,122,638 | 3.2 |
| 8 | Berkshire Hathaway Insurance Group | 15,368,968 | 3.1 |
| 9 | Progressive Group | 13,983,744 | 2.8 |
| 10 | Hartford Fire & Casualty Group | 11,508,537 | 2.3 |
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(1) Before reinsurance transactions, excluding state funds.
(2) Based on U.S. total including territories.
(3) In 2008 AIG ceded 79.9 percent of its ownership to the federal government in exchange for an $85 billion loan.
Source: National Association of Insurance Commissioners (NAIC) Annual Statement Database, via Highline Data, LLC. Copyrighted information. No portion of this work may be copied or redistributed without the express written permission of Highline Data, LLC. |
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TOP TWENTY U.S. PROPERTY/CASUALTY COMPANIES BY REVENUES, 2007 (1)
($ millions)
Rank |
Group |
Revenues |
Assets |
| 1 | Berkshire Hathaway | $118,245 | $273,160 |
| 2 | American International Group | 110,064 | 1,060,505 |
| 3 | State Farm Insurance Cos. | 61,612 | 181,422 |
| 4 | Allstate | 36,769 | 156,408 |
| 5 | Travelers Cos. | 26,017 | 115,224 |
| 6 | Liberty Mutual Insurance Group | 25,961 | 94,679 |
| 7 | Hartford Financial Services | 25,916 | 360,361 |
| 8 | Nationwide | 22,962 | 161,090 |
| 9 | Loews (CNA) | 17,920 | 76,079 |
| 10 | Progressive | 14,687 | 18,843 |
| 11 | United Services Automobile Association (USAA) | 14,418 | 67,177 |
| 12 | Chubb | 14,107 | 50,574 |
| 13 | Assurant | 8,454 | 26,750 |
| 14 | First American Corp. | 8,196 | 8,648 |
| 15 | American Family Insurance Group | 6,969 | 16,004 |
| 16 | Safeco | 6,209 | 12,640 |
| 17 | W.R. Berkley | 5,554 | 16,832 |
| 18 | Fidelity National Financial | 5,524 | 7,556 |
| 19 | Auto-Owners Insurance | 5,129 | 13,680 |
| 20 | Erie Insurance Group | 4,737 | 14,215 |
(1) Revenues for insurance companies include premium and annuity income, investment income and capital gains or losses but exclude deposits.
Source: Fortune. |
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TOP TWENTY U.S. LIFE/HEALTH INSURANCE GROUPS BY REVENUES, 2007 (1)
($ millions)
Rank |
Group |
Revenues |
Assets |
| 1 | MetLife | $53,150 | $558,562 |
| 2 | Prudential Financial | 34,401 | 485,814 |
| 3 | New York Life Insurance | 29,280 | 179,621 |
| 4 | TIAA-CREF | 27,526 | 420,315 |
| 5 | Massachusetts Mutual Life Insurance | 25,268 | 172,911 |
| 6 | Northwestern Mutual | 22,597 | 156,547 |
| 7 | AFLAC | 15,393 | 65,805 |
| 8 | Genworth Financial | 11,443 | 114,315 |
| 9 | Principal Financial | 10,907 | 154,520 |
| 10 | Lincoln National | 10,738 | 191,435 |
| 11 | Unum Group | 10,567 | 52,433 |
| 12 | Guardian Life Insurance Company of America | 10,071 | 41,319 |
| 13 | Thrivent Financial for Lutherans | 6,133 | 57,412 |
| 14 | Pacific Life | 5,325 | 111,024 |
| 15 | Western & Southern Financial Group | 4,811 | 30,941 |
| 16 | Conseco | 4,572 | 33,515 |
| 17 | Mutual of Omaha Insurance | 4,337 | 17,746 |
| 18 | CUNA Mutual Group | 3,850 | 14,946 |
| 19 | Torchmark | 3,487 | 15,241 |
| 20 | American National Insurance | 3,071 | 18,465 |
| (1) Revenues for insurance companies include premium and annuity income, investment income and capital gains or losses but exclude deposits.
Source: Fortune. |
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PROPERTY/CASUALTY INSURER FINANCIAL ASSET DISTRIBUTION, 2003-2007
($ billions)
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