U.S. property and casualty reserve releases have held steadyover the past five years, but the composition of reservedevelopment has shifted since 2008, with personal-lines releasesincreasing while commercial-lines releases have retreated,according to Moody's.

In a Special Comment, “U.S. P&C Insurers' Reserve Releasesto Continue, but Remain Modest,” Moody's notes thatcommercial-lines reserve releases, excluding AIG, totaled $6billion in 2008, more than any other sector. In 2012, commerciallines accounted for just over $1 billion, the lowest among the fivesectors measured.

Personal lines, by contrast, accounted for just under $1.5billion in 2008—second-lowest among the five sectors—but grew tojust under $4.5 billion by 2012—the most among the fivesectors.

Through the first half of 2013, Moody's says reserve releasesrepresented approximately 34 percent of pre-tax operating income,with activity driven mainly by several large personal-linescarriers. The figure is up slightly from about 30 percent for thesame period in 2012. The ratings agency says about 2/3 of the 2013releases came from the 2012 accident year. Over the past fiveyears, Moody's says reserve releases have accounted for about 40percent of pre-tax operating earnings.

Moody's also notes that adjusted earnings for 2009-2012 werelower than reported, while adjusted earnings for 2003-2008 werehigher than reported. Looking at the adjusted earnings, Moody'ssays it appears as if the market cycle peaked in 2006, whenadjusted pre-tax operating income hit just under $100 billion.Since then, adjusted pre-tax operating income steadily declined,dropping to around $5 billion in 11 before rising again to justover $20 billion in 2012.

Going forward, Moody's says it believes U.S. P&C insurerswill continue to release reserves in the medium term, “particularlyfor personal insurers. However, the level of releases forcommercial insurers is expected to remain modest as redundanciesfor older accident years diminish, and there are minimalredundancies and some deficiencies for the most recent accidentyears.”