Fitch: Commercial Lines Outlook Uncertain
NU Online News Service, Jan. 15, 11:31 a.m. EST?Fitch Ratings said today that the commercial line and reinsurance sectors of the U.S. property-casualty insurance industry would face greater uncertainty than personal lines in the coming year.
In its outlook report released today, the New York-based credit rating agency highlighted questions concerning the sectors' profitability and reserves. Fitch also announced its outlooks are unchanged from the previous year: "Negative" for the commercial lines and reinsurance segments and "Stable" for the personal lines segment.
"Pricing has improved for personal lines of the P&C insurance industry, such that rates are increasing at a faster rate than loss costs, and this trend should continue in the near term," said Jim Auden, senior director at Fitch Ratings.
"In the commercial and reinsurance segments of the P&C insurance industry, Fitch is looking for sustainable profitability improvement and diminished reserve deficiencies before shifting to a 'Stable' outlook," Mr. Auden said.
Additionally, the property-casualty industry is expected to record the largest one-year favorable swing in underwriting results in 2002 as measured by the combined ratio, he said, and this change reflects sharp increases in premium rates and implementation of more conservative underwriting practices across all business lines.
"Further, the change in underwriting performance reflects significantly lower insured catastrophe losses as 2002 was a rather benign year, while 2001 was marked by the tragic events of September 11, producing the highest catastrophe losses recorded in a single year," Mr. Auden added.
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