According to a new Conning Research & Consulting report titled "Property-Casualty Loss Reserves: As Good as It Gets?" the industry wide reserve position in 2003 kept pace with losses and older years have been strengthened, thanks to stronger pricing and resulting premium growth in the p-c sector. (Asbestos, reinsurance, property, financial and combined specialty lines were not included in the study because of lack of available historical and complete reserve data, Conning noted.)

Commenting on the results, Geri Riley, analyst at Hartford, Conn.-based Conning, said the reserve position improvement in 2003 was rapid and all-encompassing.

Among the Conning estimates:

? The reserve deficiency for the casualty lines of insurance decreased from minus-8.1 percent of carried loss reserves in 2002 to minus-2.5 percent of carried loss reserves in 2003.

? The private passenger auto liability industry reserves were redundant in 2003 by 3.7 percent of carried loss reserves, an improvement from the redundancy of 0.8 percent in 2002.

? For homeowners/farmowners insurance, reserves at year-end 2003 were redundant by 3.6 percent of carried loss reserves. That is a positive 7 percentage-point swing from 2002, when reserves appeared deficient by minus-3.5 percent.

? The reserve deficiency for 2003 in workers' compensation is minus-4.0 percent of carried loss reserves. This represents a continual improvement over Conning's estimated deficiency of minus-6.4 percent in 2002, minus-6.9 percent in 2001, and minus-7.3 percent in 2000.

? The reserve deficiency for commercial multiperil decreased from minus-13.2 percent at year-end 2002 to minus-4.0 percent at year-end 2003.

? The year-end 2003 deficiency for other liability is estimated to be minus-6.1 percent of the carried loss reserves. The year-end 2002 reserve deficiency was estimated at minus-12.4 percent of carried loss reserves.

? Commercial auto/truck liability/medical has an estimated redundancy of 1.2 percent of carried loss reserves as of 2003. From a low of minus-19.8 percent deficiency in 2001 to minus-11.2 percent in 2002, insurers have strengthened reserves and appear to have eliminated the deficiency.

? The medical malpractice insurance industry continues to be underreserved, but there appears to have been significant progress made in reducing the deficiency. The 2003 deficiency is estimated to be minus-7.6 percent of carried loss reserves.

Conning cautioned these wide-ranging improvements seen in 2003 could very well come to a halt as the pricing becomes more competitive. With rates softening further in the second half of 2004, there are indications of reductions in reserve strengthening and premium rate declines in the face of loss growth.

When rates do not keep pace with loss growth, there is certainly reason for concern about the industry's loss reserve position going forward, according to Conning.

Conning's annual study on the p-c reserve position is based on analysis of "Schedule P" of the annual statement, including 10 years of historical data and analysis of paid and incurred loss developments for the casualty and liability lines.