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Fitch: Property/Casualty Insurance Industry Sees Record U.S. Catastrophe Losses in 2004 but Profitability Up . The U.S. property and casualty insurance industry posted stronger underwriting results and profitability in 2004 relative to 2003, despite sharp increases in catastrophe losses for many market participants related to the third-quarter hurricane events in Florida and in the southeastern U.S., according to a Fitch Ratings report. According to Insurance Services Office, Inc.'s Property Claims Service, property/casualty insurers paid $27.3 billion in catastrophe losses in 2004. This figure exceeds the $26.5 billion of losses experienced in 2001, which includes the terrorist attacks of Sept. 11, 2001, and is more than double the catastrophe losses paid in 2003. "Fitch Ratings anticipates that 2004 will be the peak year for underwriting results in the current cycle," said Brian C. Schneider, director, Fitch Ratings. "While the market overall is expected to produce an underwriting profit in 2005, deterioration in core accident year loss experience is not expected to be completely offset by a return to more normalized catastrophe losses and less severe prior period reserve development." Fitch believes looking further out to the market's profit potential to 2006 and beyond is more challenging as the trend for loss costs in most segments continues to be upwards, while competitive pressures are likely to promote further premium rate reductions. These factors point to less favorable earnings prospects for the industry longer term, though the magnitude of future earnings movement is difficult to gauge. The Fitch Ratings report "Property/Casualty Insurers' Year-End 2004 Results" is available at www.fitchratings.com.

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