April 11, 2013 by Canadian Underwriter
Property and casualty insurers in the United States should see strong net premium growth and a “substantially improved” combined ratio this year, according to a new forecast released by investment management firm Conning.
Conning expects net premium for the P&C industry to grow at a rate of 4.6% over 2012 and an improved combined ratio of 101%, according to a company statement.
“Stronger preliminary results for 2012 despite Superstorm Sandy—a 6% return on equity and a 103% combined ratio—reinforce that the effect of price increases and improved underwriting are taking hold throughout the industry, ” Steven Webersen, managing director at Conning noted in a statement.
The company’s forecast is based on sustained pricing increases and the expectation of a normal level of catastrophe losses this year. Conning issues similar industry forecasts quarterly.
For 2014, Conning expects P&C premium growth of 4.8% and 4.9% in 2015.
All lines of insurance showed growth, with the exception of “medical professional liability,” which saw a decrease of about 2% in 2012, Webersen told Canadian Underwriter.
Return on equity is still not as attractive as it could be for the P&C industry, he noted. The continued low interest rate environment continues to be a challenge, he said, noting that investment income decreased about 3% in 2012 over the prior year.
Further, “… a record level of capital in the industry will inhibit further improvements in industry premium growth and pricing necessary to achieve underwriting profitability and a reasonable return on equity,” Stephan Christiansen, managing director at Conning noted in the firm’s statement.
The full forecast and analysis is available to subscribers on Conning’s website.
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