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U.S. commercial market has “short memory”: A.M. Best


December 14, 2004   by Canadian Underwriter


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In its statistical review of U.S. multi-peril Commercial lines carriers, A.M. Best shows little hope that market softening will not set in full force in 2005.
The study notes that premium growth was a solid 7.5% in 2003 for the top writers, although down from the pace set in 2002. However, indications in 2004 are that rates increases have been “nominal”, and the expectation for 2005 is for rates to plateau and begin to soften, the rating agency says.
This comes at a time when commercial underwriters are not having to take the significant reserve charges on adverse development which dragged otherwise positive results in 2002 and 2003.
“Overall, it is recognized that in light of a declining interest rate environment that the focus must be on underwriting profitability as evidenced by the improvement in 2003, but it is unlikely that this will continue over the longer term as the market has a short memory,” the statistical study notes.


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