Property/casualty insurers’ outlook stable: Moody’s

Mark A. Hofmann, Business Insurance

Property/casualty insurers’ outlook stable: Moody’s

September 6, 2012 – 10:55am

The outlook for the U.S. commercial property/casualty insurance industry remains stable, according to an analysis released Thursday by Moody’s Investors Service Inc.

New York-based Moody’s said improved premium rate levels should help support profitability in the U.S. commercial property/casualty insurance sector for the next 12 to 18 months. That will be bolstered by likely further reserve releases across most lines, Moody’s said in “U.S. Commercial P&C Insurance — Outlook Remains Stable.”

But the report cautioned that recent accident years “now appear barely adequate or moderately deficient, particularly in workers compensation, indicating both the likelihood of reduced earnings windfalls from reserve releases beyond the coming (one to two) years, as well as the importance of sustained pricing improvement in 2013.”

Moody’s also noted that low interest rates will continue to pressure insurers’ investment returns as bond portfolios roll over and are reinvested at new money rates. But the report said insurers are wary of credit and inflation risks, and “appear to be maintaining strong investment portfolio quality and durations that remain broadly aligned with their liabilities.”

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