Calm weather should translate to strong property/casualty quarter

Property/casualty insurers should report “very strong” underwriting results for the third quarter, according to an analysis issued by Keefe, Bruyette & Woods Inc. on Wednesday.

In “The Mice Sure Got to Play: 3Q14 Preview,” KBW analysts said that results were bolstered by “near-total absence of Atlantic hurricanes” as well as generally low catastrophe losses except for some regional storm activity in the Southwest, Midwest and Northeast.

The report said that other than generally favorable weather, most of the insurance industry's prior trends persisted throughout the third quarter. These included steadily decelerating, and occasionally reversing primary commercial lines rate increases; significant and broadening reinsurance rate decreases, often with looser policy terms and conditions; and modest interest rate increases, especially on the 2- and 5-year U.S. treasuries.

Looking ahead, the report says that KBW expects globally, reinsurance rates to fall 1% to 2% at the Jan. 1 renewals, with U.S. property catastrophe pricing down 5% to 10%. “Lines with recent losses, like aviation and war risk, should see rate increases, but there's probably too much capacity waiting breathlessly on the sidelines to allow for the 50-100% increases some have discussed,” according to KBW.