FOR PEOPLE working in a business that seems chronically down-in-the-mouth, analysts sounded almost giddy last month as they reviewed the property-casualty industry's recent performance and speculated about its prospects in 2004. Take, for instance, this comment from Robert P. Hartwig, Ph.D., CPCU, senior vice president and chief economist for the Insurance Information Institute. “Insurers could experience a rare 'Goldilocks' market in 2004-a brief period of time when everything is just right.”

Hartwig's comment came in the III's annual “early bird” forecast, which is a compilation of the views of Wall Street stock analysts and insurance industry observers. This year's participants included Standard & Poor's, A.G. Edwards, Tillinghast-Towers Perrin and Conning & Co.

In regard to net written premium growth, the analysts' 2004 projections averaged out to 8.1%, which while down from 14.6% and 10.8% in 2002 and 2003 respectively, is not bad compared with the average 3.4% growth from 1990 through 2000. The analysts also expect the industry's return on equity to climb into double digits for the first time since 1997, thanks to an anticipated improvement in the investment environment and continued solid underwriting. All this, in an averaging of the analysts' predictions, should lead to a 2004 combined ratio that will be a point lower than 2003's estimated 101.7, and down sharply from the 115.7 combined ratio recorded in the year of 9/11.