S&P SAYS PERSONAL LINES CARRIERS ARE STRONG:

Fundamentals remain strong for U.S. personal lines insurance carriers, according to a report published by the ratings firm Standard & Poor’s. This is reflected in S&P’s decision to retain a stable outlook on the personal lines sector as well as the improved outlook distribution for personal lines insurers. Credit analyst Polina Chernyak said that while earned premium growth, declining loss frequency, lower unfavorable reserve development and improved profitability are all favorable, increased competition should lead to 2004 being a “cyclical peak.” Looking ahead, Chernyak said that perhaps the biggest constraint on creditworthiness in the sector in 2005 could be the possible return to a less-disciplined approach to operating results as earnings from investments increase, providing a surplus to cushion against underwriting losses. The biggest question here is whether or not the major national players, those with the competitive advantage of being able to enter new markets, will stay disciplined now that there is less pressure on them to do so.

Topics Carriers