KBW: Insurers On Track for Solid First Quarter

Property and casualty insurers appear set to enjoy a solid first quarter due to relatively benign losses and continuing rate increases in both personal and commercial lines, a new analysis suggests.

In its P&C Q1 Earnings Preview, analyst firm Keefe, Bruyette and Woods says, “Excluding some manageable losses from [February's nor'easter], the weather [in Q1] was rather benign, while commercial lines' rate increases are holding and personal lines' rate increases are modestly accelerating.”

KBW says it expects insures and brokers to largely hit consensus estimates.

Regarding weather losses during the period, KBW notes that U.S. storm counts were down by about 38 percent compared to 2012's first quarter. February's nor'easter represented the most significant U.S. weather event of the quarter, but the firm describes its impact as “modest.” 

Aside from that storm, KBW says the quarter saw fewer hail events — which accounted for about two-thirds of the decrease in losses — and fewer wind and tornado events. 

Internationally, KBW says global reinsurers will likely “make it through [the quarter] unscathed.”

While KBW notes that rate increases continue across the industry, the firm cautions that personal auto increases may decelerate, “as a few large auto insurers like Progressive and Allstate look to grow policy counts.”

KBW's report follows a commercial-lines analysis by Willis, which predicts moderate upward pressure on rates in general throughout 2013, although with some exceptions. For example, some non-catastrophe-exposed commercial property risks could see rate decreases, Willis says, as well as some specialty-lines coverages.

“The specialty lines present a complex picture, with a combination of price increases and decreases across product lines,” Willis says in a statement accompanying its analysis. “Willis expects rate declines in the aviation, healthcare professional, political risks and surety coverage lines. Meanwhile, rate increases can be expected in the fidelity/crime, kidnap & ransom, terrorism and trade credit lines.”