Net Premiums Written were down 1.2%, the first decline since 1943. This is not the first soft market since 1943, so the degree to which premiums have fallen since 2003 is incredible. See my earlier post (here) for a picture of Advisen's data on this.
With $19b in underwriting profits in 2007 plus more and more money comes into the insurance industry, such as from capital markets players looking for diversification, Best reports that Policyholder Surplus was up for the 5th straight year.
We track the imbalance of supply and demand by using Policyholder surplus as the measure of supply and GDP as the measure of demand and can demonstrate where the current soft market is relative to past cycles.
Reading between the lines of Best's report (found here) the benign claims environment is the major factor in these profits. Until this changes, premium rates can continue to fall and there will still be profitable underwriters.
One interesting tidbit was a note by Best about whether enterprise risk management was helping -meaning that companies and their risk managers have adopted ERM and this is what is causing lower loss rates. We'll have to speak with our friends at RIMS to see if we can quantify this.