Advertise
Resources
Member, Beacon International Group, Ltd.
The era of property/casualty insurers boosting earnings by releasing reserves may be near an end, Barclays Capital Inc. said in an analysis.
In P&C Loss Reserves Appear Less Redundant, Barclays estimated that median reserve adequacy as a percent of analyzed reserves stood at 4% at the end of 2011, down from 7% at the end of 2010.
“Loss reserve releases significantly boosted earnings for many P&C insurers over the past six years, but this trend could be near the end based on our analysis,” Barclay’s in the report. “We expect the pace of reserve releases to moderate in 2012, and become less of a tail wind in subsequent years.”
Deteriorating industry underwriting results and eventual reserve strengthening could lead to further increases in property/casualty prices, the New York-based firm said in the analysis.
Premium growth and lower catastrophe costs helped allow U.S. property/casualty insurance companies to begin 2012 with positive net income, according to a report released this week by Moody’s Investors Service Inc.