S&P: P-C Surplus Growth Slowed In '04
NU Online News Service, April 1, 3:07 p.m. EST?Property-casualty insurers' surplus growth in 2004 lagged behind the previous year, according to a report issued by Standard & Poor's Ratings Service.[@@]
P-c surplus is expected to show about a 15 percent growth in 2004 after all companies have reported their year-end totals, compared to 20 percent in 2003, the report said.
"Strong net income growth last year, in comparison to the previous year, was more than offset by weakness in investment market returns, growth in shareholder dividends and reduced parental contributions to companies' surplus," said S&P credit analyst Alan Koerber.
The p-c industry performance as measured by the combined ratio is expected to show a two-point improvement to 98 for 2004. "This will be the first sub-100 percent result in more than a decade," Mr. Koerber said.
Despite the poor investment results, Mr. Koerber said that shareholder's dividends have increased relative to the industry's earned premiums, which in turn dampened surplus growth.
Mr. Koerber said that the decrease last year in paid-in surplus contributions from parent companies, compared to 2003, "is perhaps a commentary on the cautionary view of insurance companies' parents as well as property and liability pricing continuing to soften."
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