Insurers gain stronger profit footing for 2-Q

Insurers managed to bring their combined ratio to below the key 100% mark for the second quarter of this year as cover price increases finally began to outstrip the growth in claims costs, according to preliminary industry data collected by the Insurance Bureau of Canada (IBC). The property and casualty insurance industry finished the second quarter with a 98.8% combined ratio, showing a six percentage point improvement on the 104.8% posted for the same period last year.As a result, insurers were able to generate a net profit of $644 million for the second quarter of this year compared with the $110 million profit reported for the same period in 2002. The industry’s return on equity (ROE) for the 12 months to end June came in at 5.9% against the 2.8% shown for the comparable period last year.Net written premiums rose by 11% year-on-year to $8.5 billion for the second quarter of this year (2002 2-Q: $7.6 billion), while net earned premiums increased by 15.4% to $6.9 billion for the latest reporting period (2002 2-Q: $6 billion). In contrast, claims costs grew year-on-year by 7.4% to $4.9 billion for the second quarter of this year (2002 2-Q: $4.5 billion), which resulted in the industry producing a modest underwriting profit of $113 million for the latest reporting period compared with last year’s second quarter loss of $279 million.