As more evidence accumulates that insurers are using less reserves to augment earnings, pressure will mount on underwriting and force carriers to begin raising rates by near double-digit figures in 2012, according to a financial analyst.
In a report analyzing reserve releases among publicly traded insurers, Meyer Shields, with the firm Stifel Nicolaus, said his review of 49 insurers' fourth-quarter earnings results reveals the aggregate reserve release declined by 300 percent on a year-over-year basis.
The decline, he said, suggests “that we're approaching the point when reserve releases stop masking the inevitable accident-year underwriting result deterioration stemming from still-declining rates and rising (and potentially accelerating) claim costs.”
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