Modest improvement predicted in 2015 for property/casualty insurers

Keefe, Bruyette & Woods Inc. expects property/casualty insurers and reinsurers to post modest improvement in operating income next year, the analyst said in a report Wednesday.

In “2015 Outlook: Rebalancing Ratings,” KBW said the improvement would stem from 2014 rate increases and low loss inflation, “partly offset by fading reserve releases and normal catastrophe losses.”

2015 will feature “flattish commercial rates with emerging workers comp pressure,” together with “5% to 10% reinsurance rate decreases, with more pressure on property than casualty lines,” KBW said in the report.

KBW also said 2015 should see companies performing “more expense control efforts in light of the pricing environment,” amid a “continued ‘reaching for yield’ to offset low interest rates and soft pricing.”