Although the financial outlook for U.S. property and casualty insurers is improving largely on the back of significant rate increases introduced during 2002 industry earnings will remain under pressure through 2003 and into 2004, says a recently released forecast study by Conning Research and Consulting Inc. The study notes that, "premium growth is significant, but income and return on equity (ROE) are projected to improve only modestly over the next two years". Premium growth will likely slow down over the next two years, Conning says, falling from 2002’s projected growth rate of 13.3% to around 9.2% for 2003, and 6.5% for 2004. The loss ratio is expected to show dramatic improvement over this same period, coming off from 2001’s 115.6% to 109% for this year, then dropping back to 105.2% for 2003 and 104.5% in 2004. The biggest performance challenge facing the industry is ongoing depressed investment returns, the investment consultants note. "While underwriting improvement is expected, investment returns are likely to remain depressed. Overall, we expect the industry to be slightly more profitable, but financial performance leaves much room for improvement," comments Jack Gohsler, senior vice president at Conning. As such, U.S. insurers are only likely to achieve net taxed earnings of US$11.5 billion with an ROE of 3.6% by the end of 2004, Conning predicts. Swiss Re also released a market report suggesting that insurers globally may face low investment returns for a long time to come.