Property and Casualty Insurance Solvency and Investments - Playing the Game

Expected continuation of intense competition, large underwriting losses, high interest rates and volatile financial markets means that investment results will play a most important role in shaping company survival patterns. Maintaining solvency and survivability will mean that investment results as well as underwriting results must be “competitive.” The investment practices of several “large, good” companies are reviewed revealing differences and similarities. Comparisons to 1982 earned premiums portray perspective as to the investment-underwriting balance. During recent years the unrealized capital losses on bond portfolios were enormous but not recognized in statutory accounting. Total returns including evaluation of all capital gains should be the appropriate scoring device of the future. Opinions concerning improving total return investment results are presented. In general, e flexibility and marketability are considered essential; and in the high risk-high reward area common stocks should assume a larger role and long term bonds should assume a lesser role.