Slow but Steady Growth Forecast for P&C Industry

A two-year prediction of property/casualty insurers’ financials reveals marginal improvement.

Insurance Networking News, January 23, 2012

Justin Stephani

Steady premium growth will assist property/casualty insurers in weathering the ongoing difficulties of a volatile economy and catastrophe management, according to the most recent edition of Conning’s quarterly Property/Casualty Forecast & Analysis.

The report also notes that while the combined ratio is expected to improve, the industry is likely to underwrite at a loss for the next two years.

“Conning’s 2012 premium growth forecast now stands at three to four percent,” said Clint Harris, analyst at Conning Research & Consulting.  “The forecast industry combined ratio of 104 percent for 2012 at average catastrophe expectations, is forecast to ease slightly in 2013 as the commercial lines rate environment improves, and overall inflation remains modest.”

The tepid forecasts of growth convey reservations about a weak economic climate and the industry’s response to it, leaving “an uncertain operating environment for management,” says Stephan Christiansen, director of research at Conning. Also, Christiansen notes: “the decline in expected investment yields for the next couple of years is becoming an even more significant factor, and ROE performance is forecast in the low five percent range, similar to levels that preceded the last hard market.”

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