NU Online News Service, April 26, 1:31 p.m. EST

Excess and surplus-lines carriers are beginning to see signs of a market change, including a shift in standard-carrier appetite for traditional E&S risks, according to an SNL Financial analysis.

SNL cites comments made by RLI Corp.’s President and Chief Operating Officer Michael Stone on a recent conference call, in which he said he is “certainly...seeing [standard carriers] pull back a bit.”

SNL notes that while RLI’s E&S direct-premiums written were down in 2011 compared to 2010, the decrease was not as dramatic as the drop in E&S written premiums seen in standard carriers such as Travelers Cos.

SNL says Travelers went from writing $130.3 million in direct U.S. E&S premiums in 2010’s second quarter to $92.7 million in 2011’s second quarter. The number dropped to $57.8 million by the fourth quarter.

John Latham, president of Markel's wholesale division, said in an interview with SNL that he is seeing price increases in the E&S space and believes that could continue as insurers deal with investment-income struggles and potentially overstated capital.

However, Latham acknowledges that increases must be weighed against consumers’ ability to absorb them given the struggling economy.

Overall, E&S insurers saw an increase in the amount of direct premiums written in 2011 after “several years of declines,” according to SNL’s analysis.

American International Group, Inc., which SNL calls “the undisputed heavyweight in the space” with respect to premiums written, recorded small growth in 2011, at 0.1 percent, “but it was nevertheless positive,” says SNL. 

In 2010, AIG saw E&S direct-premiums written decline by 13 percent.