S&P: P/C Insurers in US Expected to Hit Rough Patch

Property/casualty insurers face a tough year, according to a newly released report published by S&P Global Market Intelligence. The 2016 U.S. P&C Insurance Market Report indicates that a combination of elevated catastrophe losses, unfavorable results in the private passenger auto business, and declining bond yields could crimp underwriting results and reduce overall probability.

Using a bottom-up analysis of statutory financials for almost 2,700 individual, U.S.-domiciled property/casualty entities filing NAIC statements, the report tracks performance over a 10-year period ending in 2015. Both historical and projected results are offered on a line-of-business basis in order to capture diverging trends across industry product types and produce projections that encapsulate how micro and macro factors affect growth rates, losses, and expenses. The report illustrates historical and projected pre-tax returns on equity (ROE) by business line.

Following are some key findings:

“Profit margins are projected to be much narrower than they have been in the last few years, unless something dramatic happens,” according to Tim Zawacki, senior editor and Terry Leone, manager of Insurance Research at S&P Global Market Intelligence and the authors of the report. “While insurers have wisely accounted for the fact that they haven’t been able to depend on investment gains to subsidize underwriting losses, they still need to practice restraint as they seek growth.”

The S&P Global Market Intelligence report 2016 U.S. P&C Insurance Market Report is available at http://www.snl.com/web/client?auth=inherit#news/article?id=37162551&cdid=A-37162551-13357