Deterioration in underwriting results prompted the decreases in insurers' pretax operating income, net income after taxes, and overall rate of return
, with net gains on underwriting falling $2.3 billion to $2.2 billion in first-quarter 2014 from $4.5 billion in first-quarter 2013.
He says "insurers' overall rate of return
remained subpar compared with long-term historical norms, and insurers now need much better underwriting results just to be as profitable as they were in the past."
That is, the overall rate of return
(|r.sub.m~) on any investment is a composite, first of initial cash flow generation and second of the anticipated growth in that cash flow over time.
Because of the power of compounding overtime, even a small increase in your IRA portfolio's overall rate of return
can mean a big difference in the size of your investment nest egg at retirement.
Use industry ratios to compare the taxpayer's overall rate of return
with those of other companies in the industry.
At 10.3 percent, insurers' overall rate of return
had risen to its highest level since the 12.4 percent for 2007.
"Because of today's interest rates and investment leverage, insurers' 9.6 percent annualized overall rate of return
for the first-quarter 2013 was more than a half percentage point less than their average rate of return during the 1980s, even though the 94.8 combined ratio for the first quarter was more than 14 percentage points better than the average for that decade," Murray says in a statement.
Improvement in underwriting results drove the increases in insurers' pretax operating income, net income after taxes, and overall rate of return
, with net losses on underwriting dropping to $6.7 billion in nine-months 2012 from $34.7 billion in nine-months 2011.
"While insurers' overall results for first-half 2012 are certainly much better than their results for first-half 2011, insurers' overall rate of return
remains subpar compared with long-term historical norms, and insurers now need much better underwriting results just to be as profitable as they were in the past," says Michael R.