U.S. industry’s combined ratio likely to surpass 106% in 2011: Conning

The U.S. property and casualty’s combined ratio will likely creep higher than 106% in 2011, Conning Research & Consulting suggested.
Conning’s ‘Property-Casualty Forecast & Analysis’ forecasts line of business and industry growth and performance for 2011-2013. It is based on Conning’s proprietary property and casualty industry model and analysis of key industry drivers, data and reporting.
In 2011, premium growth will likely only be 2 to 3% in 2011, and the industry forecast combined ratio, higher than 106%, includes additional deterioration in the underwriting results and adjustments for the record catastrophe activity of 2011 Q2, a Conning release says.
“The expected forecast drivers for 2012 and 2013 are stronger economic growth than in 2011 and expanding rate-firming in commercial lines, with negative offsets on investment income,” said Stephan Christiansen, director of research at Conning.
“We forecast an increase in both exposure and premium rate growth for each year, but rate firming is short of what should be interpreted as a broad turn in the underwriting cycle.”
Declining investment yields in 2011-2013 is becoming an even more significant factor driving industry expectations, the release continues.