Advertise
Resources
Member, Beacon International Group, Ltd.
The U.S. property/casualty industry had $22 billion in redundant reserves at the end of 2010, virtually the same as year-end 2009, Aon Benfield Analytics said in an analysis.
The U.S. property/casualty industry had $21.9 billion in reserves at the end of 2009, the global reinsurance intermediary and capital adviser of Chicago-based Aon Corp. said Wednesday.
“This study confirms that there is still a head wind against a broad market hardening from continued reserve releases,” Aon Benfield Analytics CEO Stephen Mildenhall said in a statement.
During the first quarter this year, insurers released $4.6 billion in reserves vs. $5.7 billion during the same period a year ago, according to the analysis. “These releases reflect good loss experience from the hard-market years and continued favorable frequency trends across all liability lines in the U.S.,” Mr. Mildenhall said in the statement.
Concerns about a market turn have increased due to a series of catastrophes so far this year, resulting in property/casualty insurers posting lower profits in recent months.
Commercial liability leads list
Of redundant reserves released across all lines of business during the first quarter, commercial liability totaled $9.9 billion, workers compensation totaled $6.5 billion and commercial property totaled $1.5 billion, according to the analysis.
Aon Benfield estimated that $9.8 billion in favorable development will emerge in the industry's reserves overall this year. If that trend continues at the same rate, the reserve redundancy will be eliminated in 2.2 years, it said.
Most financially impaired property/casualty companies that failed last year did so because of deficient loss reserves and inadequate pricing.