Conning: Despite Storms and Competition, P&C Outlook is Good

November 3, 2005

Property casualty insurance industry results should be relatively strong from 2005 through 2007, despite 2005’s hurricane activity and an increasingly competitive market, according to a new report by Conning Research and Consulting, Inc.

“While the effects of the 2005 hurricane season will be dramatic, and
are not yet fully realized, we still anticipate that industry-wide
property casualty insurers will report strong results for the
2005-2007 period, with industry-wide ROE’s above seven percent,” said Clint Harris, analyst at Conning Research & Consulting.

“Property casualty industry performance will degrade somewhat over the next three years due to increasing price competition, but it will still be strong by historical standards,” he added.

The Conning Research report, “Property Casualty Forecast & Analysis by Line of Insurance-Third Quarter 2005,” provides projections of underwriting and financial results for the entire property-casualty industry as well as the major lines of business, including personal auto, homeowners/farmowners, commercial auto, workers’ compensation, commercial multiperil, general liability, non-proportional reinsurance, medical malpractice, fire & allied, and inland marine.

“Our detailed forecast for the property casualty industry and its
major lines of business has been modified in the third quarter
edition with an increased expectation for losses,” said Stephan
Christiansen, director of research at Conning Research & Consulting.
“Conning’s forecast varies by line of business but generally assumes
increasing competition in 2005 for most lines of business and
accelerating price competition for a number of commercial lines in
2006, with a possible continuation to 2007 for some. While the
catastrophes will mitigate price competition in severe windstorm
exposed areas, the broader trend is toward continued softening. “

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