This year should see more negative rating actions than positiveones due in large part to the likelihood of insurers taking reservecharges, says A.M. Best.
The ratings agency has held a negative outlook on thecommercial-lines sector since 2011, and says in a recent briefingthat it is maintaining that outlook for 2014. It says its findingsreflect the continued concerns for those commercial-lines insurersthat have yet to recognize loss-reserve deficiencies in theirbalance sheets and for those likely to take reserve charges duringupswings in the market cycle.
Commercial insurers' balance sheets appear capable of absorbingshortfalls in prior-year reserves, says Best, but the ratingsagency believes some insurers may run into larger problems if thereserve shortfalls prove too wide and difficult to overcome.
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