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P&C industry operating results expected to improve in 2013: Fitch


July 29, 2013   by Canadian Underwriter


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Fitch Ratings Inc. is predicting better operating results this year than in 2012 for property and casualty insurance firms.

Fitch predicts P&C operating results to improve this year

P&C firms “continue to benefit from premium rate increases in nearly all major commercial and personal product lines following several years of inadequate pricing and severe market competition,” Fitch stated in a release July 25, but added the trend is “likely to diminish.”

The ratings firm’s P&C outlook for 2013 “calls for better operating results relative to 2012 given improved pricing across product lines,” Fitch stated.

“Catastrophe loss experience is the biggest source of future earnings volatility for the second half of the year, as hurricane season is still in its early stages,” according to Fitch. “Favourable loss reserve development continues to shrink, but continues to positively influence earnings.”

Fitch referred to financial results recently released by W.R. Berkley Corp., Platinum Underwriters Holdings Ltd., The Travelers Companies Inc. and ACE Ltd.

Zurich-based ACE reported July 23 its financial results for the three months ending June 30, recording a 6.3% increase year-to-year in second-quarter net premiums written and a 7.5% year-to-year gain in second-quarter net premiums earned. Fitch also noted ACE’s net operating income in the second quarter of 2013 was 6.3% higher than in the same period in 2012.

“Premium growth and margin improvement in ACE’s property/casualty business resulted in a combined ratio of 87.9% compared to 88.7% in the same quarter of 2012,” Fitch stated of ACE.

Fitch noted New York-based Travelers reported net income of US$925 million in the second quarter of 2013, up from US$499 million in the second quarter of 2012, and these results were “buoyed by” Travelers’ business and personal insurance segments.

In Canada, Travelers sells insurance through both the St. Paul Fire and Marine Insurance Company and Travelers Insurance Company of Canada. The carrier announced in June it  greed to acquire The Dominion of Canada General Insurance Company from E-L Financial Corp. Ltd.

On July 17, Pembroke, Bermuda-based reinsurance firm Platinum Underwriters reported Q2 2013 net premiums written of US$146.370 million, up from US$141.449 million from the same period in 2012.

Then on July 22, W.R. Berkley of Greenwich, Conn. reported net premiums written of US$1.34 billion for the second quarter of 2013, up from US$1.19 billion in the same quarter of 2012.

In Canada, Berkley writes a variety of commercial insurance policies, such as property, commercial general liability, directors’ and officers’ liability, architects and engineers’ liability and network security and privacy breach liability.

For W.R. Berkley as a whole, Fitch noted its net income increased 6% year-to-year, and its results “were driven by improved underwriting margins, overcoming declines in investment income.”


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