US P&C insurers suffer from severe weather
US property and casualty (PC) 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, 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 predicted 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.
"Still, the competitive environment remains rational as the most challenging lines such as commercial auto and workers' compensation command further rate increases."
Based on a sample of companies, US commercial rates rose 5.2 percent infirst-quarter 2014, compared to 6 percent in fourth-quarter 2013. Property rates experienced the most pressure.
Competitive pressure continues to build in personal auto, said Moody's, as direct writers continue to gain market share and large agency writers start to pursue growth again in 2014.
