The segment’s combined ratio for the first nine months was 105.4% compared with 92.2% a year ago, when the industry recorded an aggregate underwriting gain of $9.9 billion.

Softening market conditions combined with higher catastrophe losses were the two main factors behind the decline, Best said in the report, adding that large mortgage and financial guarantee underwriting losses also contributed to the industry's underwriting decline.

Overall, 13 of the top 25 commercial insurers reported a combined ratio of under 100%, according to Oldwick, N.J.-based Best, with just three of the insurers reporting a combined ratio of under 90%. American International Group Inc. reported the largest surge in its combined ratio, which rose to 105.9% during the first nine months of 2008 compared with 90% for the same period a year ago.

Net premiums written for the entire U.S. property/casualty industry fell 0.6% to $339.3 billion for the first nine months of this year. Net income for the industry during the nine month period tumbled 85% to $7.3 billion.

Although mortgage and financial guarantee insurers generate less than 2% of the industry's overall net premiums written, those insurers significantly impacted the industry's overall performance in 2008, Best said. The two segments collectively reported an underwriting loss of $7.7 billion and a combined ratio of 241.7% for the first nine months of 2008, compared with a $0.7 billion gain and combined ratio of 82% in the prior-year period.

The U.S. reinsurance sector also suffered underwriting losses, with its combined ratio for the first nine months in 2008 increasing to 104.9% from 94.6% in the comparable period in 2007.

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