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U.S. property/casualty insurers' reserves deteriorating: Aon Benfield


The U.S. property/casualty insurance industry's reserve position is continuing to deteriorate, according to a study released Thursday by Aon Benfield Group Ltd.

The “U.S. P&C Industry Statutory Reserve Study” is based on U.S. insurers' statutory filings and reflects year-end 2013 data. Compiled by Aon Benfield Analytics, it found commercial lines continued to move further into an overall deficiency position of $2.8 billion at the end of last year, compared with an estimated $900 million deficiency at the end of 2012.

“Reserve positions deteriorated across the commercial lines sector, which includes commercial property, commercial liability and workers compensation,” said Aon Benfield in a statement announcing the report.

The report found that insurers — both commercial and personal lines — released $14.8 billion of reserves last year, the most since the 2008-2010 period, said Aon Benfield.

“It was a surprise to see more reserves released in 2013 as compared to 2011 and 2012, but the prior accident years continue to produce favorable reserve takedowns from the positive claims environment at the time,” said Brian Alvers, Chicago-based chief actuary for Aon Benfield Americas, in the statement. “The overall commercial lines reserves position models deficient as of year-end 2013, and continued reserve releases of approximately $1.4 billion in the first quarter of 2014 have made the hole deeper. Rates increases in commercial lines sector of the U.S. insurance industry seem to be tapering off, therefore creating more risk for those insurers' balance sheets.”

The full study can be accessed here.