U.S. P/C INSURERS CONTINUE TO BOOST LOSS RESERVES FOR OLD BUSINESS:

For U.S. property/casualty insurers, periodic glimpses of rising profitability have been overshadowed by relentless price-cutting, natural and man-made catastrophes, and claims inflation. Following an unprecedented surge in losses for terrorism, asbestos, and corporate liability, however, came new hope that firm pricing would trigger a turnaround in performance that would bolster balance sheets and produce respectable earnings. And so it will, but the need to fund future claims for policies underwritten prior to 2002 casts a shadow on the industry’s recovery and rules out any rapid return to higher credit ratings, according to a report titled “Dark Clouds Linger As U.S. Property/Casualty Insurers’ Loss Reserves For Old Business Upped Again,” which was published by Standard & Poor’s Ratings Services. S&P’s outlook on the U.S. commercial lines P/C industry remains negative because of continuing concerns about the need to fund reserves, skepticism about the industry’s ability to maintain pricing discipline, and uncertainties surrounding the wave of investigations into the industry’s business practices. Although 2004 will produce strong earnings, and signs are reasonably good for 2005, reports S&P, the negative outlook indicates that the industry will see more ratings falling than rising over the course of the year.

Topics USA Carriers Profit Loss Property Casualty