Personal-lines insurers' capital strength and core-underwriting earnings power should offset challenges posed by natural catastrophes; high-frequency, low-severity weather events; and the "very competitive nature of the market," according to Moody's Investors Service.
As such, in its August 2011 Industry Outlook, Moody's says it is maintaining its stable outlook on the U.S. personal-lines industry.
While the general macroeconomic trends, such as high unemployment and a slow housing-market recovery, are impacting new-business growth, Moody's notes that personal lines are, relative to commercial lines, insulated from these trends. "Coverage for personal auto and homeowners' insurance is typically mandatory, and customers generally continue to pay policy premiums during periods of financial distress."
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