Confidence in the reserve adequacy of U.S. insurers increased modestly for accident years 2003 and 2004, according to Standard & Poor’s, but the rating agency said insurers’ ability to attain adequate reserves for accident years 2001 and prior remains a problem.
“Insurers and reinsurers are no closer than they were a year ago to achieving full reserve adequacy for that business,” said Standard & Poor’s credit analyst Siddhartha Ghosh.
According to a Standard & Poor’s report, “Reserving Needs For Soft Market Years Remain Problematic,” ongoing legacy issues from those years, which include the industry’s overstatement of capital by an average of 16 percent after the World Trade Center disaster, mean that reserves might still undergo more adverse development. The report also gives some preliminary projections about total reserving trends come year-end 2005.
The report is available to subscribers of RatingsDirect, Standard & Poor’s Web-based credit research and analysis system, at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (212) 438-9823 or sending an e-mail to email@example.com.