Moody's Investors Service said the outlook for Australia's property-casualty insurance industry is stable.
"The industry has registered a good underwriting performance in the last few years, largely due to its sound claims experience, driven in turn by relatively benign weather, the absence of major catastrophes, the effects of early tort reforms, and greater pricing discipline among insurers," Moody's said in its report.
The report was jointly written by Jeffrey Liew, a vice president-senior analyst, and Siew Wai Wan, an associate analyst in the rating agency's Hong Kong office.
The topics discussed include the continued softening in premium rates, the gradual slowdown in merger and acquisition activities, the diversification in the industry's business mix, financial fundamentals, and regulatory issues.
In terms of ranking by premium revenue, Australia's property-casualty insurance market remains the world's 10th largest, said Moody's.
Direct p-c revenues for 2004 measured Australian $32.3 billion (U.S. $23.9 billion), 1.7 percent of global revenues, and a marginal increase from Australian $31.4 billion (U.S. $23.3 billion) in 2003.
"Premium rates for several business classes continued to soften during renewals in 2005 as the insurance cycle turned," Mr. Wan said, adding, "Going forward, while overall underwriting profitability is likely to moderate, premium rates are unlikely to fall to levels seen in the 1990′s due to improvements in the operating environment over recent years."
He also said that industry players are unlikely to drastically under-cut each others' premium prices to increase market share.
The report is online at www.moodys.com.
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