A&E LOSSES FALL AGAIN

OLDWICK, N.J. -- Asbestos and environmental liabilities fell for a second consecutive year in 1997, according to a new analysis by the A.M. Best Co.

A.M. Best, in a recent special report, said asbestos and environmental incurred losses accounted for only 0.7 points of the property/casualty industry's overall combined ratio of 101.6% last year, compared with 4.1 points of the 1995 combined ratio of 106.5%.

The industry's net incurred asbestos and environmental losses fell to $1.9 billion last year, compared with $10.3 billion in 1995.

"A.M. Best believes the sharp decline in A&E insured losses over the past two years reflects larger companies reverting to pay-as-you-go funding after growing comfortable with their reserves based on ground-up exposure analysis.

In addition, soft market conditions in most commercial segments and earnings pressures have discouraged large A&E reserve additions," according to the Best special report.

But the report cautioned, "while unfunded A&E liabilities are no longer the industry concern they were several years ago, they remain a significant financial concern for insurers that have not yet taken appropriate funding actions."