Decline in Surplus Tarnishes 2002

The property/casualty insurance industry‘s statutory surplus dropped $4.4 billion to $285.2 billion at year-end 2002 from $289.6 billion at year-end 2001. Surplus declined despite improvement in the industry‘s net income after taxes to positive $2.9 billion last year from negative $7 billion in 2001, Insurance Services Office, Inc. (ISO) and the National Association of Independent Insurers (NAII) reported today. Capital losses on investments drove the decline in surplus last year. Insurers suffered $1.1 billion in realized capital losses and $20.6 billion in unrealized capital losses in 2002, as the S&P 500 declined 23.4 percent. Combining realized and unrealized losses, insurers experienced $21.7 billion in overall capital losses last year, with overall capital losses ballooning by 90.6 percent from $11.4 billion in 2001.