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EXCESS/SURPLUS LINES MARKET'S SHORT-TERM OUTLOOK IS 'DIM', RATING AGENCY SAYS

Posted On: Jul. 5, 1998 12:00 AM CST

NEW YORK -- The excess and surplus lines market's short-term prospects are "dim" overall, says a report by rating agency Moody's Investors Service Inc. in New York.

"Although credit quality is currently stable, the future strength of the evolving E&S market is uncertain, reflecting both deteriorating pricing conditions and the volatility inherent in E&S risks," says the report, which predicts that insurer and broker consolidation will continue.

"This market has recently undergone a series of changes due to increased non-E&S competition, soft pricing in the overall market and broker consolidation, which promise to continue at least through the medium term," says the report.

"There are, however, a few potential growth areas for capitalization. They include health care, financial products, some environmental areas and employment practices liability coverage."