Based on sustained pricing increases and a normal level of catastrophe losses, the P&C industry, as a whole, is experiencing a return to profitability, strong net-premium growth and a substantially improved combined ratio for 2013, according Conning’s “Property-Casualty Forecast & Analysis by Line of Insurance.” The quarterly forecast and report is developed by Conning using a proprietary property/casualty industry model and analysis of key industry drivers and data.
“Stronger preliminary results for 2012 despite Superstorm Sandy—a 6-percent return on equity and a 103-percent combined ratio—reinforce that the effect of price increases and improved underwriting are taking hold throughout the industry, ” said Steven Webersen, managing director at Conning. “Conning’s 2013 property/casualty forecast is for net premium growth to accelerate at a 4.6-percent rate over prior year based on continued rate increases.”
For 2013 Conning forecasts the combined ratio to improve to 101 percent, assuming a normal level of catastrophe losses. Low investment yields, however, continue to dampen return-on-equity, pressuring underwriting, pricing and profitability.
“Looking further out, we forecast property/casualty premium growth of 4.8 percent in 2014 and 4.9 percent in 2015,” said Stephan Christiansen, managing director at Conning. “We expect sustained rate increases to improve underwriting results to near breakeven by 2014. However, weak economic conditions and a record level of capital in the industry will inhibit further improvements in industry premium growth and pricing necessary to achieve underwriting profitability and a reasonable return on equity.”
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