Relatively modest recent losses will result in a healthy fourth quarter for the property-casualty insurance industry, an analyst is forecasting.

Brian Meredith, with Bank of America, said in his fourth-quarter earnings report to investors that “except for reserve loss development from hurricanes, we do not expect much adverse loss development in the sector.”

As for commercial lines, Mr. Meredith said that price stability in property insurance lines and a moderation in casualty lines in the fourth quarter are also favorable signs.

“Underwriting margins, excluding the impact of Hurricane Wilma, will be very attractive and may result in better than expected earnings for some companies,” he wrote.

Rate increases will be focused in national account property, property business on the Gulf Coast, and the marine and energy business, according to the analyst.

Mr. Meredith takes a more pessimistic view of personal lines where “auto insurers will continue to experience a gradually spread compression between premium rate increases and loss-cost inflation, in our view.”

He wrote that he believes this will show up in both excluded-catastrophe accident-year combined ratios and in management's discussion of how competitive the market is.

Special Reports /

Good Fourth Quarter Predicted For P-C Firms

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