While the property/casualty industry still appears to have sufficient reserves, its overall position deteriorated in 2008, continuing a trend that began in 2007, according to a new study by Conning Research and Consulting, Hartford, Conn.

"Significant releases occurred in most lines of business, with an average benefit of almost three points in calendar-year loss ratio, compared with what would have been reported had no releases taken place," said Stephan Christiansen, director of research at Conning Research & Consulting. "The most significant releases, in terms of dollars, were in the most recent accident years of liability lines, and in workers' compensation. These lines are the most difficult to assess, and future rates of settlement and claim emergence must be watched closely."

The Conning Research study, "Property-Casualty Loss Reserves: Once More to the Well," analyzes statutory data from Schedule P as part of Conning's ongoing annual industry review of the property/casualty industry's balance sheet position.

"Overall, the industry appears to continue to have sufficient reserves under reasonable assumptions of claims settlement patterns," said Christiansen. "Older years (for accident years prior to 1999) continue to develop adversely, but the pace of development has slowed considerably. The older-year reserves have been massively strengthened over the past several years and it is possible that the industry has now caught up to the need in this 'tail' portion of the reserves. However, the remaining reserves specifically set aside for latent claims such as asbestos and environmental liabilities appear thinner than in previous years, relative to recent settlement levels."

"Property-Casualty Loss Reserves: Once More to the Well" is available for purchase from Conning Research & Consulting by visiting the company's Web site.

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