Property/casualty insurers show strong first-half earnings: Moody's
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Lower catastrophe losses and increased premium growth fueled strong earnings for U.S. property/casualty insurers during the first half of this year, according to a report issued Tuesday by Moody’s Investors Service Inc.
“Rate increases have now broadened, and many companies are reporting increases across all business lines with an upward trend from” the first quarter of 2012, according to “U.S. P&C Insurers’ Q2 2012 Earnings Improve; Pricing Momentum Continues.”
Moody’s said that for companies it rated, net written premiums were up about 6% year over year because of rate increases and exposure growth.
“We expect some improvement in accident-year loss ratios in 2012 as rate increases translate into earned premiums and loss costs remain relatively benign,” said Moody’s in the report.
The report noted that even though catastrophe losses for the second quarter of this year were significantly lower than those of the corresponding period of 2011, they remained above the 10-year average. The report said diversification allowed large underwriters to absorb losses caused by severe weather and the western wildfires.
“Insurers remain active in their catastrophe risk management practices, particularly in light of catastrophe model revisions and, importantly, high catastrophe losses in 2011,” said Moody’s. “While the law of averages would lead us to expect that catastrophe losses will likely be lower in 2012, the severe weather and wildfires experienced through large parts of the U.S. have provided for a difficult first half, although less so than 2011. The generally strong capital positions for P/C insurers and the increase in catastrophe loss expectations should help mitigate the risk of earnings and capital surprises.”
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