The U.S. property-casualty industry is in a stronger capital position now than before any major catastrophic event, including the Sept. 11, 2001, terrorist attacks and 2005′s Hurricane Katrina, over the last quarter century, according to an industry economist.

Robert Hartwig

Robert Hartwig, president of the Insurance Information Institute, said the ratio of premiums written to available surplus, a simple measure of financial leverage, stood at 0.95 in December, meaning for every 95 cents in premium written, insurers had $1 in capital or surplus.

“By this measure, the industry’s capital position is stronger now,” Hartwig said in a statement. Insured losses were $32.5 billion after the September 2001 terrorist attacks and $41 billion after Hurricane Katrina in September 2005.

In his year-end 2008 analysis of the U.S. property-casualty industry, Hartwig said the economy has hurt U.S. property-casualty insurers, yet they “remain strong.”

“The basic explanation for the resilience and strength that P-C insurers have demonstrated during the current and countless past financial crises are attributable to a deeply entrenched and conservative operating philosophy that leads directly to superior risk management strategies,” wrote Hartwig in his analysis of the industry’s financial performance. “Insurers necessarily run their business under the assumption that every day is a potential doomsday-because it is.”

The next big potential for losses comes with the June 1 start of the Atlantic hurricane season. Hartwig credits insurers’ risk management strategies in enabling them to survive financial storms and make them ready for storm season.

“The third quarter is traditionally the most expensive for insurers due to the fact that the peak of hurricane season occurs in September,” Hartwig said. “Despite a 12% year-to-year drop in the P-C industry’s capacity in 2008 as compared to 2007, insurers currently hold more than $400 billion in capital in the form of policyholder surplus for whatever events the future might hold.”

Despite “sizable” losses in their investment portfolios, property-casualty insurers remained profitable in 2008, earning $2.4 billion in net income after taxes. That figure was down $60.1 billion, or 96.2%, from the $62.5 billion profit in net income after taxes that property-casualty insurers realized in 2007, largely because of the poor investment environment in 2008 and higher losses on insurance operations. The latter was driven by $26 billion in insured catastrophe losses. September 2008′s Hurricane Ike accounted for about 40% of the year’s overall catastrophe losses. Ike was the fourth-most expensive hurricane in U.S. history.