The decline in reserve releases could indicate that the property and casualty market is set for a turn in the cycle that could come as soon as 2012, according to a financial analyst's report.
Reviewing 54 insurers' third-quarter earnings for this year, Stifel Nicolaus said in an analyst's note that year-over-year reserve releases declined by almost 23 percent, indicating that the industry is nearing the point where releases will "stop masking accident-year underwriting result deterioration."
As results worsen, Stifel Nicolaus said it expects carriers to either begin raising rates or dropping unprofitable business. These moves will result in 10 percent rate increases by the industry by mid-2012, the report said.
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