INSURERS HEALTHY DESPITE STORMS

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, January 12, 1993                   TAG: 9301120090
SECTION: BUSINESS                    PAGE: A-7   EDITION: METRO  
SOURCE: Associated Press
DATELINE: NEW YORK                                LENGTH: Medium
INSURERS HEALTHY DESPITE STORMS
Despite a year of record-breaking underwriting losses, the property and casualty insurance industry maintained its financial health in 1992, a trade magazine reported Monday.
Companies suffered a total of $34 billion in underwriting losses, including $14 billion due to damage from Hurricane Andrew and other disasters, according to industry results published in Best's Insurance Management Reports.
Investment income, capital gains and capital contributions offset the losses and enabled the industry to increase its policyholders' surplus - the financial cushion a firm has after its liabilities are deducted from assets - by $4.3 billion to $163 billion.
Best's estimated the industry earned $6 billion in 1992, down from $10.4 billion in 1991.
But analysts said short-term measures taken to shore up bottom lines - including liquidation of $9 billion worth of high-yield bonds - have weakened the industry's long-term profitability.
As a result, insurance firms "will act like turtles and pull their heads in for the next 12 to 18 months," said John Snyder, senior vice president of the property and casualty division at A.M. Best Co., the magazine's publisher.
"They are taking steps to . . . withdraw or downsize in catastrophe-prone areas of the country," Snyder said, noting that home and business owners in Florida and California would see rate increases or "availability problems."
Best's also reported:

The industry wrote a total of $229 billion worth of premiums, a nearly 3 percent gain over 1991.

Property and casualty stocks outperformed the general market beginning in September after lagging behind the Dow Jones Industrial Average for most of the past three years.

An estimated 45 property and casualty insurers went bust, but Best said it expected the number to decline to 35 next year if catastrophe losses are closer to normal.

by Bhavesh Jinadra by CNB