Article Abstract:
The mixed results achieved by the property and casualty insurance industry's three business areas in 1996 are predicted by industry observers to carry into 1997. Although the personal lines segment was buoyed by strong auto insurance results in 1996, the projected accident-year deterioration of premium rates and ballooning catastrophe losses are predicted to hurt profitability in this area in 1997. Commercial lines carriers will continue to be plagued by weak capital generation, depressed underwriting results, and higher underwriting leverage. Consolidation in the reinsurance industry will drive out sub-performing companies while intensifying competition among within the market's top tier.
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Article Abstract:
A slough of financial liabilities including catastrophe exposures, loss reserve deficiencies, mass tort liabilities, low interest rates and inefficient expense structures hurt property and casualty insurer returns in 1996 and is sure to negatively affect their performance in 1997. Catastrophe losses incurred by the industry totaled $8 bil in 1996, while those incurred by loss adjustment expense reserves totaled an estimated $370 bil for the year.
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Article Abstract:
A. M. Best Co expects California's new open rating law to improve the workers' compensation insurance market in that state. Competitive pressures resulting from the open rating system are expected to make for volatile earnings and pressure insurers' balance sheets. A. M. Best maintains that many companies are pricing irresponsibly in an effort to gain entry or expand market share in CA which will erode profit margins.
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