Significant declines in the reinsurance market, particularly in property catastrophe lines, are set to persist into 2015.
This is the latest finding of Fitch, which explained that as pricing turns less favourable, premium growth is more dependent on exposure growth tied to macroeconomic forces, and core underwriting performance is likely to deteriorate in 2015.
US property/casualty insurers’ operating performance was relatively stable in the first half of 2014 as benefits from premium rate increases over the past few years helped to counterbalance modestly higher catastrophe losses and marginally lower contribution from loss reserve releases.
Despite the continuing pressure, only eight out of 48 companies failed to report an underwriting profit in the first half of 2014.
Although the underwriting combined ratio deteriorated moderately, the group maintained solid underwriting profitability. Regional insurers had the greatest decline in underwriting performance from year to year with a 5.6-point increase in the sub-segments calendar-year combined ratio.
“Despite expected declines in near-term profitability, Fitch expects the P/C industry's overall profile to remain broadly supportive of current ratings,” said the rating agency.
Fitch, reinsurance, property catastrophe, North America