A.M. Best foresees stability on U.S. personal lines segment

A.M. Best has maintained a stable outlook on the personal lines segment of the U.S. market, driven primarily by favourable frequency and severity trends, modest catastrophic activity and the maintenance of pricing and underwriting discipline, among other factors.
Performance in the personal lines segment continues to be driven by the automobile liability and physical damage lines, as combined they account for approximately 65% of net written premium for the personal lines composite, says an A.M. Best press release.
The combination of continually evolving pricing segmentation, avoidance of market-share based pricing decisions, declining frequency trends and modest increases in severity has enabled the segment to produce favourable results over the last several years.
In the homeowners line, the generally modest catastrophe losses for the year coupled with on-going underwriting and pricing discipline produced an extremely strong combined ratio.
Despite the modest catastrophic activity of 2006, it is anticipated that carriers will continue to be diligent in their efforts regarding risk management, says the press release.
A.M. Best anticipates deterioration in pricing and earnings through 2007, given the increased competitive market, but believes the overall impact, assuming a normal catastrophe year, will be modest in 2007.