Property-casualty insurers can expect another year of overall industry underwriting profit in 2006, a new Conning study found.
The results should match those of 2004, according to the latest Conning Research and Consulting Inc. forecast report for the property-casualty industry, which provides a first look at results through 2008.
"Analysis of 2005 results for the industry shows a remarkable consistency in profitability by line of business, aside from the effects of catastrophes," Stephan Christiansen, director of research at Conning Research & Consulting Inc., said in a statement.
"Profitability continues through 2006, but slowing premium growth, rising loss costs and accumulating surplus will take their toll and the industry will again show combined ratios above 100 percent in 2007 and 2008," he added.
The study identifies several conditions that are clouding our 2006-2008 forecasts. "Market conditions are becoming more price-competitive outside of catastrophe-prone areas, but with some volatility," he said.
Strong surplus accumulation, loss reserves and cash flow stimulate the trend, the report asserted.
The projection also reflects an expectation for heightened catastrophe losses, but below the levels seen in 2004 and 2005.
Increased pricing for coastal exposures, and higher costs and reduced availability of reinsurance are helping to moderate these premium trends through 2008. "Overall, we expect ROEs will slowly subside, falling from 9.2 percent in 2005 to 7 percent by 2008," Mr. Christiansen said.
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