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TEXT-S&P report on U.S. property/casualty insurers
May 30, 2012 / 6:03 PM / 5 years ago

TEXT-S&P report on U.S. property/casualty insurers

(The following statement was released by the rating agency)

May 30 - After numerous natural catastrophes led to near record-high insured losses for U.S. property/casualty (P/C) insurers in 2011, Standard & Poor’s Ratings Services expects the sector’s credit quality to be stable in 2012 and 2013, said an article published today, titled “Stable Demand And An Ability To Withstand Losses Should Support U.S. Property/Casualty Insurers’ Financial Performance.” “We believe that insured losses resulting from man-made or natural catastrophes have a bigger impact on P/C--commercial and personal lines--insurers’ operating results than macroeconomic factors do relative to other sectors,” said Standard & Poor’s credit analyst Neil Stein. “Demand for P/C insurance, such as automobile and homeowners’, is fairly steady because many consider these insurance products an essential good.” Policyholder volume nationwide has remained very stable for a number of years. “In our view, U.S.-based P/C insurers are generally on solid financial footing,” said Mr. Stein. “They have very strong balance sheets and are able to withstand large catastrophes and manage their asset, credit, and underwriting risks.” In addition, capitalization remains a significant strength for most of the companies we rate, with supporting investment strategies and asset portfolios that are generally conservative and largely risk averse to address the unpredictable and volatile nature and timing of claims. We expect modestly positive premium growth in 2012, largely because of rate increases stemming from last year’s catastrophe activity and payroll additions, but we believe the increases will not be uniform across all product lines. “Despite these strengths, we see some grounds for caution because P/C insurers continue to face a sluggish economy, reinvestment risk resulting from low investment yields, and potentially inadequate reserve levels--primarily among commercial lines insurers,” said Mr. Stein. (Caryn Trokie, New York Ratings Unit)

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