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Insurers could see challenges in 2014 after 'very good' 2013: Industry panel


NEW YORK — Last year was a very good year for property/casualty insurers, but 2014 may present challenges to companies as they strive to match or better those results, according to a panel of industry executives speaking at the Insurance Information Institute Inc.'s Joint Industry Forum in New York on Tuesday.

The sector has "already achieved peak cyclical earnings" in 2013 and there is "little chance for cyclical strengthening” in 2014, said Jay Gelb, managing director at Barclay's Capital.

2013 was "a great underwriting year," which could lead to softening prices in 2014 that will impact the bottom line of insurers, said Mr. Gelb.

Last year was the best year since the financial crises, said Matthew Mosher, senior vice president and chief rating officer at A.M. Best Co. Inc. He would not expect 2014 to be as good based at least in part on a return to "normalized" catastrophe losses.

Brandi Andrews, senior manager with AIR Worldwide Corp., said 2013 experienced low catastrophe losses, which helped insurers. While some argue that the frequency and severity of large catastrophes is increasing, Ms. Andrews said that there is no consensus about this among scientists and academics.

Mr. Gelb added that he does not expect insurance company investment and income to be buoyed by interest rates in 2014. "We are not expecting an increase in investment income in 2014," he said, adding that investment income has been down every year since 2007.

Mr. Mosher was somewhat more optimistic, saying that while he believes "there will be movement off the negative trends" of 2013, the half-point or so improvement in returns will not materially affect the way insurers conduct themselves in the marketplace.