Property/casualty insurer competition expected to increase: Moody's

Competition among property/casualty insurers should increase throughout the remainder of the year, according to an analysis released Thursday by Moody's Investors Service.

According to “U.S. P&C Insurers' Earnings Lower in Q2 2014 on Higher Catastrophe Losses,” the increased competition will reflect the industry's “strong capital base and improved profitability.”

Moody's said it expects casualty rate increases to continue to slow. The report added, however, that the rating agency expects “pricing trends in commercial casualty lines to remain in positive territory, exceeding loss cost trends” because loss cost trends are relatively benign, interest rates remain low, and accident-year combined ratios for some casualty lines “are still not meeting target returns.”

But Moody's said it expects “increasing pressure” on commercial rates because of lower reinsurance pricing, reflecting competitive pressure on reinsurers from alternative capital providers.

“Competition is increasing for commercial property lines, particularly shared and layered programs, and price increases could fall further and even decline over the year if there are no major catastrophes,” said Moody's.