As expected, the surplus lines market experienced increasing competitive pressure in 2007, which has continued in 2008, leading to a decline in the overall direct premium volume written by excess and surplus lines insurers.
Despite the premium erosion, adherence to disciplined underwriting principles helped surplus lines companies generate strong underwriting and operating results.
Indeed, current soft market conditions portend deterioration in profitability for surplus lines insurers, with additional decreases in premium levels anticipated over the near term, according to A.M. Best's annual report, "U.S. Surplus Lines–2007 Market Review," distributed this month at the annual conference of the National Association of Professional Surplus Lines Offices.
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