Property & casualty loss reserves strong as of year-end 2013: Conning

The loss reserve position of the U.S. property-casualty industry is slightly improved as of year-end 2013, assuming a continuation of current claims settlement patterns, notes a new study released this week by Conning.

“Our view of the property-casualty insurance industry loss reserve position is that it remains stable, perhaps even slightly improved in 2013 when compared to our previous annual analyses,” Stephan Christiansen, managing director at Conning, said in releasing 2013 Property-Casualty Loss Reserves: Still Strong, but Potential Negatives May Outweigh the Positives.

“Overall, the industry continues to appear to have sufficient reserves, with a modest degree of safety, under assumptions that claims settlement patterns will continue at their current pace,” Christiansen notes.

“However, in a stochastic analysis of possible loss payouts across a range of economic scenarios, the possibilities of adverse developments slightly outweigh positive developments,” he cautions in a statement from Conning, an investment management company for the global insurance industry.

The study includes a byline stochastic analysis and review of the probable impacts of various inflation scenarios on loss reserves.

“This improvement in reserve strength comes in spite of additional reserve releases in 2013,” Steve Webersen, director of research at Conning, says, adding the 2013 release marks the eighth consecutive year of reserve releases.

“On an overall basis, the industry released in excess of $13 billion in reserves in 2013, based on the preliminary data used for this analysis,” Webersen says. “More than half of the 2013 releases came from the all other lines category, which includes among other lines auto physical damage, surety, A&H (accident and health) and financial.”