Net income for P&C insurers increased almost 50 percent in 2012 compared to the year prior, driven by higher earned premiums and slightly-lower, but still high, catastrophe losses, according to a special comment from Moody’s Investor Service. For most insurers, investment income increased modestly and reserve releases were down.
“The favorable pricing momentum and gradually improving economy, coupled with relatively benign loss cost trends, will benefit accident year loss ratios and underwriting margins for 2013 (excluding catastrophes). Retention ratios should remain relatively stable as the rate increases are broad based across the industry,” according to Moody’s “US P&C Insurers Earnings Improve in 2012 Despite High CATs; Pricing Momentum Continues” statement. “Offsetting these positive factors are headwinds from tapering loss reserve releases and still-low investment yields, which are placing pressure on operating margins but should support the improving pricing environment.”
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