Volatility in the economy, the underwriting cycle, and catastrophe management, combined with low investment yields will create a difficult performance environment for property-casualty insurers, according to the most recent edition of Conning’s quarterly Property-Casualty Forecast & Analysis.
“Conning’s 2012 premium growth forecast now stands at three to four percent,” said Clint Harris, analyst at Conning Research & Consulting. “The forecast industry combined ratio of 104 percent for 2012 at average catastrophe expectations, is forecast to ease slightly in 2013 as the commercial lines rate environment improves, and overall inflation remains modest.”
The Conning Research service, “Property-Casualty Forecast & Analysis” forecasts line of business and industry growth and performance through 2013. The 140 page report is based on Conning’s proprietary property-casualty industry and line of business models and analyses of key industry and segment drivers, data and reporting.
“The weak and changing economic recovery and the industry’s response in terms of pricing and reserving will combine to create an uncertain operating environment for management,” said Stephan Christiansen, director of research at Conning. “We forecast modest increase in both exposure and premium rate growth for both 2012 and 2013, but rate firming still short of what should be interpreted as a broad turn in the underwriting cycle. However, the decline in expected investment yields for the next couple of years is becoming an even more significant factor, and ROE performance is forecast in the low five percent range, similar to levels that preceded the last hard market.”
Conning’s “Property-Casualty Forecast & Analysis” is available for purchase from Conning Research & Consulting by calling (888) 707-1177 or by visiting the company’s web site at www.conningresearch.com.