A.M. Best: Surplus Lines Results Dip in Response to Competition, Losses

In 2008, the underwriting and operating performance of surplus lines companies continued to outpace that of the total property/casualty industry, although at a diminished level from 2007 due to persistent soft market conditions, the recession, and underwriting and investment losses.

Although the surplus lines industry generated a profit for the year, it represented an almost 67 percent decrease from 2007. As expected, market competition began affecting the performance metrics of the surplus lines insurers to a greater extent.

Standard market carriers continue to compete on surplus lines risks, and efforts by American International Group Inc.’s surplus lines companies to protect their renewal portfolios also have contributed to the sustained competitiveness in the market. Other pressures came from the Bermuda-based carriers with their substantial capital and the desire for top-line growth.

Overall, surplus lines insurers remained very well capitalized, managed the market cycle adequately and maintained conservative balance sheet strength.

In 2008, the surplus lines:

Source: A.M. Best Co.