U.S. property and casualty insurers have eased their reserve levels this year but will mostly maintain healthy cushions through the end of 2011, according to a recent report from Moody's Investors Service.
Reserves are expected to be about breakeven to slightly redundant for standard commercial lines by the end of this year, Moody's said, while property and casualty insurers' rates have held steady or increased slightly.
The ratings firm expects reserve releases will continue to decline through this year as companies begin to recognize the reserve deficient position for recent accident years in standard commercial lines, particularly with workers' compensation and general liability insurance.
Writers of medical liability insurance, on the other hand, will continue to release reserves over the next few years, Moody's predicted. Business conditions for such policies are often different from those in other lines of insurance.
Personal lines carriers will also likely continue releasing reserves, Moody's said.
"While we rate insurers with the expectation that there will be some volatility in pricing and reserves over time, downgrades could occur for companies with unexpected outsized reserve charges," analyst Jasper Cooper said.