US property & casualty insurers suffered losses throughout the first quarter of 2014, driven primarily by higher weather-related losses and elevated non-cat losses.
The report, issued by rating agency Moody’s, found that US P&C insurers reported 11 percent lower earnings in the quarter.
Investment income increased by 3 percent, supported by strong returns in alternative investments. Reserves releases were down however, continuing their moderating trend.
Moody’s predicts that moderating commercial line rates will slow further but remain above the trend in loss costs for the rest of the year.
It also predicts that the industry's large capital base, which grew in the quarter given earnings and higher unrealised gains, together with heightened competition, will constrain P&C pricing in 2014.
"Based on commentary from the insurers' quarterly earnings calls, commercial rate deceleration is trickling down from large property accounts to middle market accounts as carriers push for greater retention, now that a majority of their business has achieved rate adequacy," says Ji Liu, a Moody's analyst and author of the report.
Based on a sample of companies, US commercial rates rose 5.2 percent in first-quarter 2014, compared to 6 percent in fourth-quarter 2013. Property rates experienced the most pressure.
Liu continues, "Still, the competitive environment remains rational as the most challenging lines such as commercial auto and workers' compensation command further rate increases."
Moody’s observe that competitive pressure continues to build in personal auto, as direct writers continue to gain market share and large agency writers start to pursue growth again in 2014.
P&C, insurance, Moody's, Ji Liu