Insurers of Property Lose $1.2 Billion in 1st Quarter : Underwriting: Northridge quake and plunge in investment income are double whammy for industry.

The nation’s property casualty insurance industry lost $1.2 billion in the first quarter, hit hard by the Northridge earthquake and dramatically lower investment income, a trade group said Thursday.

The Jan. 17 earthquake--the third-most-costly U.S. catastrophe ever--derailed the industry’s drive to recover from a series of disasters that have come chock-a-block over the last four years.

But more worrisome to industry analysts was a deterioration during the first quarter of the dividend and interest income the industry gets from investing its premiums.

“The earth movement shook the industry, but it is the quicksand of declining investment income that is causing the flow of red ink,” said Sean Mooney, senior vice president and economist at the Insurance Information Institute.

Net investment income, together with realized capital gains, brought the industry’s total pretax net investment gain for the quarter to $9 billion, down 16.3% from $10.8 billion in the first quarter of 1993.

Though the results indicate that pressure to increase premiums is building on companies, analysts were not ready to predict that an industrywide price increase is imminent.

“There is a lot of capacity and a lot of competition, and I do not see a general price increase on the horizon,” said a spokeswoman at Minet Inc., one of the largest U.S. brokers.

The first-quarter loss reflected record-breaking catastrophe losses of $6.5 billion, as estimated by the Property Claim Services division of the American Insurance Services Group.

Estimated losses for the California earthquake alone, reported through March 31, were $4.5 billion, making it the third-largest catastrophe after Hurricane Andrew in 1992 and Hurricane Hugo in 1989.

Severe winter weather in early 1994 accounted for another major part of the losses.

Other big losses in recent years have included fires, the 1992 Los Angeles riots, the 1993 bombing of the World Trade Center in New York and the March, 1993, blizzard that swept through 24 states.

The figures, based on the reports of companies that account for 96% of the U.S. property casualty insurance business, were released by Insurance Services Office Inc. and the National Assn. of Independent Insurers.