NU Online News Service, Jan. 29, 3:42 p.m. EST
For 2009 the personal lines insurance sector is likely to have experienced underwriting losses, and 2010 has a negative outlook, Standard & Poor's Ratings Services reported.
"Standard & Poor's believes that significant investment portfolio and earnings declines have considerably dampened the operating performance and capitalization of some insurers–predominantly those with meaningful life insurance operations," said S&P's credit analyst Neil Stein in a statement.
His firm, he said, is "concerned that the strain may compromise the financial strength of the consolidated enterprise."
S&P said it is maintaining the negative outlook on the U.S. personal lines property and casualty insurance sector that has been in effect since December 2008, which includes personal automobile and homeowners coverage.
The rating service said it expects downgrades to exceed upgrades in the next 12 months, according to the report titled "U.S. Personal Lines 2010 Outlook: What Didn't Kill Them Could Make Insurers Stronger." At this time, S&P said it expects most downgrades will be one notch.
Despite the negative outlook, S&P said it remains confident in the sector's long-term fundamental strength and it believes most personal lines insurers are well positioned to deal with their credit, investment and operational risks.
"In our view, the personal lines companies that most likely will be better positioned to succeed will be the ones with strong leaders who exploit the lessons learned from this period of turmoil, remain committed to a disciplined underwriting approach, and improve risk management in their core lines of business," said Mr. Stein.
The report can be purchased by calling 212-438-7280 or e-mailing research_request@standardandpoors.com.
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