Fitch: P-C Results Improved In ?04
NU Online News Service, March 31, 3:18 p.m. EST?Fitch Ratings reported that the property-casualty insurance industry posted stronger underwriting results and profitability in 2004 despite severe losses, but there is no trend to continued profitability.[@@]
The results of the study are contained in Chicago-based Fitch's report titled, "Property/Casualty Insurers' Year-End 2004 Results (U.S.)."
Insurers reported record catastrophe losses from the four hurricanes that hit Florida and other portions of the Southeast. Some insurers with international exposures sustained additional losses from South Asia's Dec. 26, 2004 tsunami.
Insurers paid $27.3 billion in catastrophe losses in 2004. The figure exceeds the $26.5 billion of losses experienced in 2001, which includes the Sept. 11 terrorist attacks, and is more than double catastrophe losses paid in 2003.
Insurers reported pretax losses of $21.6 billion from the U.S. hurricanes, according to the report, which is equal to about 9.3 percent of aggregate earned premium for insurers under the rating company's purview.
Companies in Fitch's group with the largest estimated pretax hurricane losses include Allstate ($2 billion), American International Group ($931 million), and St. Paul Travelers ($725 million).
"Fitch Ratings anticipates that 2004 will be the peak year for underwriting results in the current cycle," said Brian C. Schneider, director, Fitch Ratings.
He added, "While the market overall is expected to produce an underwriting profit in 2005, deterioration in core accident-year loss experience is not expected to be completely offset by a return to more normalized catastrophe losses and less severe prior-period reserve development."
Looking further out to 2006 and beyond, Fitch said it believes the potential for profit is more challenging as a trend for loss costs in most segments continues to point upward.
Fitch said competitive pressures are likely to promote further premium rate reductions pointing to less favorable earnings prospects for the industry longer term. The firm cautioned, however that the magnitude of future earnings movement is difficult to gauge.
The report is available on the Fitch Ratings Web site at www.fitchratings.com.
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