NU Online News Service, July 25, 3:00 p.m.EDT

The property and casualty industry's figures may not be as badas some believe, and because of that a change in the soft-marketdirection may be delayed until the beginning of 2013, says anindustry consultant.

In a recent newsletter, Charles L. Ruoff, president of CR MarketStrategies Inc., says, “Looking beneath the headline numbers, wesee the continuing negative influence of the mortgage andfinancial-guaranty markets making the overall industry figures lookworse.”

He says the first-quarter financial performance of the U.S.P&C insurance industry “suggests that the target for a 2012cyclical change may be delayed until the start of 2013.”

He notes that overseas losses experienced by U.S. reinsurers arealso a factor in making the figures look worse than they are.

Using numbers supplied by ISO, he says U.S. reinsurance andmortgage and financial-guaranty insurers account for close to 8percent of industry premium, but account for a little more than 73percent of reported underwriting losses.

Without those two segments, the industry combined ratio in thefirst quarter stands at 101.2, rather than 103.3.

“So the core industry looks to be a bit more profitable if these'outlier' segments are removed, as each beats to a differentmarketing drum within the overall market,” he says.

Mortgage and financial-guaranty markets are tied to “the legacyof the subprime market, including extension into [mortgage-backedsecurities] and [collateralized-debt securities] that helpedperpetuate that asset bubble,” Ruoff says.

He continues, “The take-away here is that the 'core' market isnot as distressed in terms of underwriting results as the broadermarket view would have you believe. That is not exactly news, butin the effort to time the market-cycle change, it becomes veryimportant.”