A.M. Best Study Reports P/C Premiums Show Strong Growth, Earnings Remain Depressed During 1Q 2001 J

July 5, 2001

According to an A.M. Best Co. special-report excerpt published in the July 2 issue of BestWeek, property/casualty net premiums written showed the strongest growth since the tail end of the last hard market in the second quarter of 1987. This growth was fueled by robust price increases in both the reinsurance and primary commercial-lines markets.

Even personal-lines premiums began to show improved volume growth, as rate increases were implemented in the nonstandard market.

A.M. Best data shows that net premiums written rose 11 percent over the comparable quarter of 2000, while the combined ratio improved a modest 1.1 points from 107.2 in 2000 to 106.1 in 2001.

Nevertheless, earnings for the sector remained depressed, although the reinsurance sector began to report the good news associated with improved rates and reduced catastrophe losses. The good news is that insurers are likely to sustain rate increases into the first half of 2002.

Market casualties have been the catalyst for a flight to quality in the primary market, which will accelerate consolidation and widen the gap between strong and marginal players.

Those that completed restructuring or reunderwriting initiatives during the latter part of the 1990s, or have maintained disciplined underwriting and reserving fundamentals, are best positioned to benefit from this phenomenon, while internally focused insurers will face greater challenges in attracting and maintaining good business.

The full report is available to BestWeek subscribers at www.bestweek.com. Non-subscribers can purchase the full report from www.bestweek.com.

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