Profits in the nation’s property-casualty insurance industry declined almost six percent in 2007, slipping to $61.9 billion last year from $65.8 billion in 2006. The industry’s overall profitability as measured by its rate of return on average policyholders’ surplus dipped to 12.3 percent in 2007 from 14.4 percent in 2006, according to the Insurance Services Office (ISO), the Insurance Information Institute (III) and the Property and Casualty Insurers Association of America (PCI).

Net written premium growth was down 0.6 percent in 2007, the first such decline since 1943. At the same time policyholder surplus, a measure of capacity, increased 6.5 percent to a record $517.9 billion. Though profits remained reasonably strong, industry margins did fall short of those realized by the Fortune 500 group of companies, which turned in an estimated average return on equity (ROE) in the 13 to 14 percent range in 2007.

2007 Year-End Results (I.I.I.)

April 15, 2008