Look for strong second-quarter property-casualty profitability but anemic top-line growth, said one investment bank today.

Bear Stearns property-casualty analyst David Small said that all reports have indicated the price declines have accelerated during the quarter.

“Over the past few quarters, managements have described the rate environment as stable and [said] there is still room to grow given 'fat' in current pricing,” Mr. Small wrote.

Competition in large insurance brokerage accounts will remain intense. “Within this subsector, we continue to favor Willis, whose middle market strategy should continue to result in outsized organic growth, as it takes share from smaller, less efficient players,” he wrote.

Lackluster results most likely will come from Marsh, but the share price will still be bolstered by leveraged buyout speculation, he added.

On personal lines, the focus will stay on frequency and severity trends, while many companies will face challenging year-over-year comparisons.

Allstate likely will post stable earnings due to its pricing discipline, while Progressive will feel the impact of aggressive pricing actions it has taken over the past few months.

Reinsurers should post solid return-on-equity figures with near peak, though declining pricing.

“For commercial line players, the focus will be on whether favorable loss cost trends will continue to offset lower pricing,” Mr. Small wrote.

Over the past few years, accident-year loss ratios have continued to decline, “and we suspect this is unlikely to continue for much longer,” he wrote.

Special Reports /

Analyst Sees Strong Second-Quarter Profits

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