A.M. Best changes outlook on U.S. commercial lines to ‘Negative’

A.M. Best has revised its outlook to negative from stable for U.S. commercial lines for 2011.
The revision implies that negative rating actions will outnumber positive rating actions in 2011, despite the fact that the vast majority of rating actions will be affirmations.
“The outlook change reflects A.M. Best’s expectation of continued competitive market conditions, gradual price deterioration and lower favorable loss-reserve development,” A.M. Best said in a press release. “With sluggish economic growth expected and the replenishment of the segment’s surplus in 2009 and 2010, capacity remains high.
“This will continue to foster moderate deterioration in rates. Combined with loss-cost inflation, this pricing trend will continue to compress margins for the segment, pushing the combined ratio over 100[%].”
In the personal lines sector, A.M. Best continues to maintain a stable outlook in 2011.