The U.K. property-casualty industry outlook remains stable, according to the latest report by Moody's Investors Service.
While profitability on commercial lines is expected to deteriorate from a more competitive pricing environment, personal lines business may offset that as recent rate increases take effect, the report noted.
"Profitability in the sector has been strong in recent times, reflecting a combination of favorable premium rating conditions, benign loss experience, an advantageous investment environment and, in some cases, increased operating effectiveness," said Stephen Hunnisett, a Moody's vice president and senior analyst who authored the report.
The top players in the company market–Aviva RBS, AXA, Zurich and RSA–will continue to dominate the scene, according to the report, which noted that these firms account for more than half of net written premiums in the United Kingdom and provide the market leader in all but one sector.
"Nevertheless, Moody's sees room for a range of smaller players, generally specializing in certain product lines," the report said.
Consolidation among the top players is seen as unlikely given the current strength of their market position and the fact that the majority are strategically important elements of larger groups, Moody's said.
But outside the top tier, Moody's sees some volatility in the rankings of the carriers, "although their overall market share will remain fairly constant," the report said.
Property-casualty distribution in the United Kingdom has become more complex, with the personal lines market becoming increasingly oriented toward direct sales as consumers gain confidence in online transactions.
As a result of the increasing use of the Internet in both price comparison and brokering policies, Moody's anticipates a gradual reduction in underwriting expenses.
"However, most of this benefit is expected to be passed on to consumers due to the competitive nature of the U.K. market," Mr. Hunnisett said.
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