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Member, Beacon International Group, Ltd.
NEW YORK—Catastrophes hammered the underwriting results of U.S. property/casualty insurers in the first half of the year, causing the 48 publicly traded insurers’ aggregate combined ratio to deteriorate to 108.5%, Fitch Ratings said Thursday in a report.
That compares with an aggregate 97.2% combined ratio for the group during the first half of last year, New York-based Fitch said in the report, “Property/Casualty Insurers’ Midyear 2011 Financial Results.”
Fitch said that catastrophe losses for the group studied reached nearly $22 billion during the first half.
Earlier in the week, A.M. Best Co. Inc. estimated industrywide catastrophe losses totaled $27 billion for the first six months of 2011.
Fitch said reserve releases somewhat softened the impact of the unprecedented catastrophe losses, saying the vast majority of the group reported favorable loss reserve development.
One in seven report underwriting profit
But the report also found that the impact of reserve releases “has moderated, trimming 2.2 points from the aggregate first-half 2011 combined ratio vs. a 3.3 point reduction in the prior year. Excluding the effects of prior-year reserve movements, only seven of the 48 entities reviewed produced an underwriting profit for the first half of 2011,” Fitch said in the analysis.
While insurers and reinsurers affected by the catastrophes will “experience significant price increases in response to the recent losses,” Fitch said a return to a hard market across the broader property/casualty market remains unlikely because of market capital levels and the competitive environment.
Most Italian and Spanish insurers likely will not suffer ratings downgrades if the sovereign debt ratings of their countries are downgraded modestly, according to Fitch Ratings Ltd.