Posted on 12 Jun 2009
Fitch Ratings said Thursday while premium declines for Property/Casualty insurers are moderating, the industry remains on pace for an unprecedented second-straight year of lower premiums.
The drop will more than offset smaller losses at financial guarantors and mortgage insurers, helping result in a second-straight year when claims costs outpace increases.
The underwriting troubles come on top of billions of dollars in investment losses the industry recorded last year as markets gyrated wildly. The statutory pretax total investment return for the property-and-casualty industry in 2008 was -2.8%, the first drop since 1974, said Fitch.
It added low investment yields and returns are expected this year, along with higher accident losses - excluding catastrophes - and still-falling prices.
Nonetheless, profits are expected to rise slightly this year from 2008. Fitch added, "A return to the extremely soft market conditions of the late 1990s is imminent, however, market conditions are not likely to improve substantially in the near term given current market capacity and competitive factors."