Disappointing returns on equity in the coming year may lead the property and casualty insurance industry to a quicker return to stiffer pricing, according to Keefe, Bruyette & Woods analysts.
The firm said it expects p&c stock prices to remain flat in 2010 with the risk of weak book value growth and low ROE, valuations remaining low, and every line on the income statement “more likely to disappoint than positively surprise,” the firm said.
“The upside is that perhaps significant disappointment will lead the industry to the eventual hard market turn that much quicker,” the analysts added in their report, “2010 Outlook: The Market Is Right–P&C Valuations Following Fundamentals.”
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