A.M. Best “cautiously optimistic” for personal lines in 2008

A.M. Best Co. has maintained a stable outlook for the personal lines segment in 2008, despite the moderate deterioration of results in 2007.
The deterioration in 2007 results reflects increasing loss-costs trends as well as competitive market conditions, an A.M. Best statement says.
“A.M. Best anticipates these trends will continue in 2008, with additional modest declines in overall financial performance,” the release says. “However, results are projected to remain adequate with a very modest underwriting gain in 2008.”
A key risk factor in 2008 will be carriers’ approach to pricing in a competitive environment along with a shift in underlying loss-cost trends, A.M. Best says.
This has become a critical discussion point in the A.M. Best rating assessment and companies looking for positive changes in their ratings will need to demonstrate underwriting discipline, the statement adds.
The severity of the soft market for the personal lines segment may be tempered relative to prior cycles, “given the underlying structural changes in terms of underwriting and pricing segmentation.”
Factors that could negatively impact the segment include the possibility of irrational market-based pricing decisions, catastrophes and regulatory mandates, the release says.