Growth should rebound this year for U.S. insurers: Moody’s

After a challenging 2011 that featured record-setting catastrophe losses, stagnant investment income and thin reserve margins, U.S. property and casualty insurers should see improved results and stronger growth in 2012, according to Moody’s Investor Services.

In a report released Mar. 22, U.S. P&C Insurers’ Earnings Down in 2011, the rating agency stated prices in most lines are expected to rise this year.

“Rates do seem to be broadly strong,” said the report’s author, Paul Bauer, vice president and senior credit officer for Moody’s. “The only remaining area of weakness is professional liability and D&O.

“The bad cat year, the lower investment income and declining reserve releases will put a lot of pressure to make sure prices are adequate.”

Moody’s added the property and casualty industry has solid credit fundamentals thanks to its prudent business model.

“Even though there has been a lot attention on low bond yields and the difficulty of boosting earnings through investment income, the actual numbers are not that bad,” Bauer said. “Total investment income was only down about 3% in 2011.”