U.S. Property/casualty insurers' operating performance improved in 2013,
according to a new Fitch Ratings report. The improvement is largely a
result of lower catastrophe-related losses and reductions in the core
loss ratio from premium rate increases across many product segments.
The aggregate combined ratio of 48 publicly traded property/casualty
(re)insurers improved by 5.2 percentage points to 93.3%. Only four
companies of these 48 companies posted a 2013 combined ratio above 100%.
The accident-year loss ratio (excluding catastrophe losses) improved by
The group's aggregate operating earnings increased by 30% versus 2012,
while the 2013 operating return on equity improved to 8.8% from 7.3% in
2012. Only seven of the 48 companies in the group had a lower year-over
year operating ROE.
Reinsurers posted the most improved underwriting performance, as well as
the highest operating ROE of any industry subsectors. This result is not
surprising given the low catastrophe activity in 2013.
Favorable prior period loss reserve development continues to boost
underwriting performance, representing approximately 2.6% of earned
premium in 2013 versus 2.9% in the prior year. A few individual insurers
experienced unfavorable development in 2013. Fitch continues to believe
that, after recognizing significant reserve redundancies over the last
five years, the P/C industry loss reserve position is gravitating toward
Underwriting results and operating profitability for 2013 could
represent peak results for the next few years. Pricing gains have slowed
in primary lines and property reinsurance rates declined at the Jan. 1
Despite expected declines in near-term profitability, Fitch expects the
P/C industry's overall profile to remain broadly supportive of current
The full report, 'U.S. Property/Casualty Insurers' 2013 Financial
Results' is available at 'www.fitchratings.com'
under the following headers:
Sectors >> Financial Institutions >> Insurance >> Research
Additional information is available at 'www.fitchratings.com'
Applicable Criteria and Related Research: Property/Casualty Insurers'
2013 Financial Resultshttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=740798
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