P/C industry's second quarter results expected to be strong: KBW
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NEW YORK—The U.S. property/casualty insurance industry likely will post strong second-quarter earnings, New York-based investment bank Keefe, Bruyette & Woods Inc. said in a report issued Wednesday.
The report credits negligible losses and rising prices across most lines of business for the strong financial numbers. Moreover, the report expects particularly robust numbers from commercial lines insurers because most losses incurred due the hailstorms, wildfires and tornadoes during the second quarter likely will impact personal lines insurers the most.
“We expect the pricing commentary to remain positive during 2Q12 conference calls, with most companies reporting mid-single-digit rate increases driven by commercial property and workers compensation risks,” according to the report. “Even laggards like directors and officers liability may have finally reached positive territory.”
KBW said the lack of large catastrophe losses also would buoy the Bermuda-based reinsurance market. “We expect operating results from most of our Bermuda reinsurance group to be solid this quarter,” the report states. “A lingering question that remains is if any companies will increase their Thailand flood loss estimates, which has been a hot topic in recent weeks.”
Another mitigating factor likely to partially offset the good underwriting returns for insurers and reinsurers is weak investment returns, the report concludes. “Investment yields should continue to be a drag on all returns on equity—a continuing story, in our view.”
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