The note went on to say that American International Group’s $4.2 billion reserve charge accounted for the bulk of the swing in the quarter’s reserve trend. It could have broad impact on the industry because smaller insurers use industry results to supplement their own proprietary data.

Even without AIG, the report noted that industry releases declined more than 14 percent on a year-over-year basis. Forty-seven percent of public companies reported lower reserve releases in the 2010 fourth quarter compared to the previous year.

“Company by company, the industry seems to be absorbing the fact that the gravy train of post-hard market reserve releases is slowing down,” said Mr. Shields.

With reserve releases fading and carriers reporting worse results, the analyst said more insurers are expected to either raise rates or walk away from unprofitable business. All of this could translate into an approximate 10 percent increase in rates by mid-2012, he said.

However, the report was cautious about investing in carriers, saying that with the increases, some of these carriers may discover reserve problems.

At the same time, Stifel Nicolaus released an analysis of how today’s jobs numbers report could impact insurance brokers. The government said that payrolls increased by 1.25 million and the unemployment rate dropped to 8.9 percent.

As company headcounts increase, brokers will begin to benefit from increased growth in workers’ compensation and benefits demand, said the report.

Mr. Shields noted that the uptick in manufacturing and construction, which improved by 100 basis points—the largest since October 2006—“typically implies higher workers’ compensation premium volumes than service and government jobs, which is obviously a positive for brokers.”