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A.M. Best maintains stable outlooks for personal and reinsurance markets


March 3, 2009   by Canadian Underwriter


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A.M. Best Co. is maintaining a stable outlook in 2009 for both the global reinsurance sector and the U.S. personal lines sector.
The ratings agency listed factors that support its reinsurance sector outlook, including:
•    sound underlying operating earnings generated over the most recent timeframe;
•    demonstrated underwriting discipline; and
•    the risk-adjusted capital adequacy of the segment is currently adequate relative to existing ratings, with sufficient cushion to absorb a normal level of catastrophic activity.
The playing field of underwriting opportunities perhaps has shifted back to traditional reinsurance underwriting, given the removal of capacity from the market as a result of the confluence of a global capital market crisis and severe catastrophe losses, A.M. Best notes. 
“More than ever in 2009 the challenge will be for reinsurers to ensure that business is written at acceptable rates and to write business that can be supported by their respective balance sheets,” the release says.
In personal lines, despite the volatility of 2008 due to catastrophic activity, uncertain investment markets and difficult overall economic conditions, “the personal lines segment maintains generally favourable risk-adjusted capitalization,” A.M. Best reports.
Even though risk-adjusted capitalization remains favourable, the 2008 decline in capitalization does mean there is less room for deterioration than in prior years, the release continues.
A.M. Best says it anticipates carriers writing predominantly personal lines will approach this environment in a prudent manner, particularly from a pricing and risk-management perspective.


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