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Investors greeted the insurance industry’s second week of earnings season warmly. Most insurance stocks rose during the last week in April, modestly outpacing broader measures of the stock market and most other financial institutions.

Moving on to personal observations from the second wave of earnings reports, this week I offer four:

(1) Workers’ compensation, love it or hate it?

Few insurers would disagree that workers’ comp is one of the most challenging lines of commercial insurance. However, it is surprising that some companies are actively growing their comp books, while others are either still shrinking or fighting to reverse increasingly poor underwriting results.

Large national insurers such as Travelers and Chubb grew their comp books in the double digits during first-quarter 2011 (or, just under 10 percent in the case of Chubb). Meanwhile, specialists such as SeaBright and regional insurers including Selective reported declining premiums on combined ratios both rising and long past “breaking the buck” (that is, increasingly above underwriting break-even). Moreover, a casual review of year-end statutory filings suggests that workers’ comp reserve adequacy is the most questionable across virtually all lines of insurance, particularly for accident year 2008 and subsequent.

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