Employment
Data compiled by the U.S. Bureau of Labor Statistics show the insurance industry provided 2.2 million jobs in 2002.

Over the last 10 years, employment in the insurance industry (all sectors) has averaged 2.1 percent of the total U.S. employment.

Capital & Surplus
A property/casualty insurer must maintain a certain level of capital and surplus to underwrite risks. This capital is known as "capacity." When the industry is hit by high losses, such as after the World Trade Center terrorist attack, capacity is diminished. It can be restored by increases in net income, favorable investment returns, reinsuring more risk, and/or raising additional capital. When there is excess capacity, usually because of a high return on investments, premiums tend to decline as insurers compete for market share. As premiums decline, underwriting losses are likely to grow, reducing capacity and causing insurers to raise rates and tighten conditions and limits.

Property/casualty insurers rarely show an overall underwriting profit, i.e., a net gain from premiums after costs of sales, dividends to policyholders, loss payments, and loss adjustment costs (which include litigation costs). Some lines of insurance do produce a steady underwriting profit, but others record combined ratios (costs in excess of premiums) that are above 100 year after year. In 2002, the combined ratio was 107, which means insurers paid out $1.07 for every dollar in earned premium. The difference is generally cove red by investment income from a number of sources, including capital and surplus accounts, money set aside for loss reserves and unearned premium reserves, and capital gains.

In 2002, net income after taxes bounced back to $2.9 billion, from a net loss of $7.0 billion in 2001, the industry's first ever net aftertax loss.

Assets
The chart below shows financial assets held by property/casualty insurers.

Source: Board of Governors of the Federal Reserve System.