Barclays predicts increasing property/casualty prices

A home damaged from an F2 Tornado in Lapeer, Mich.

Property/casualty insurance prices should continue to increase this year, according to an analysis by Barclays Capital Inc.

Property/casualty rate increases “should be sustained through 2013 and lead to underlying margin expansion,” Barclays said Monday in “Halfway Through 4Q Earnings Season, Strong Core P&C & Life Results (So Far)”. But Barclays added that expectations for the property/casualty insurance sector “are now elevated with little room for missteps, in our view.”

Property/casualty insurance pricing “should remain in positive territory in 2013 especially after the impact of Sandy,” the report concluded. Commercial P/C “insurers remain constructive about the P&C pricing environment, while reinsurers appear more positive on property reinsurance rates for the critical Jan. 1 renewal season.”

Barclays said property/casualty insurers' underwriting results benefit from price increases, contained claims costs and continued reserve releases. But the report noted that downward pressure on investment income is continuing.

The full report is available here.