S&P’s Sees Improvement for Personal Lines Insurers

The performance of both of the major coverages written by predominantly personal lines insurers – automobile and homeowners multi-peril insurance – have begun to improve, and there is the prospect of continued improvement through at least 2003, according to a report published by Standard & Poor’s.

“The industry’s capital grew at a great rate in the mid-to-late 1990s,” Standard & Poor’s credit analyst Charles Titterton noted. “This led to price wars, which drove pricing adequacy down.” Today, however, the industry’s capitalization is not as high, and there are a number of major insurers that have become capital constrained and are not in a position to compete on price. As a result, pricing adequacy and – consequently – overall industry performance have improved.

“Industry Report Card: U.S. Personal Lines Insurance” is available on RatingsDirect, Standard & Poor’s Web-based credit analysis system, at www.ratingsdirect.com