Regarding its report on just third-quarter results, Moody’s says, “Net income was down nearly 70 percent in [the 2011 third quarter] versus [the 2010 third quarter], again reflecting catastrophe losses as well as small realized capital losses. Investment-market volatility during the quarter led to a downturn in some insurers’ investment performance, particularly stocks as the S&P 500 declined by 14 percent.”

Moody’s says the decline in investments reflects the low interest-rate environment.

In a bit of good news for the industry, Moody's says increased exposures and stabilizing rates drove a 7 percent increase in net premiums wrtten for the 2011 third quarter compared to the 2010 third quarter. "According to pricing surveys and conference calls, pricing continued to stabilize this quarter with most commercial lines insurers reporting flat or slightly increased rates, depending on the line of business."

Moody's adds that the excess and surplus business appears to be moving back to the E&S market as well. In October, at the National Association of Professional Surplus Lines Offices' annual conference, E&S executives said this is a sign they were looking for before buying into the idea that the market is turning.

For personal lines, Moody's says rates continue to increase as they have for the past two years.

Moody's indicates that it expects modest premium growth to continue as companies seek further rate increases.

As was noted in Fitch’s nine-month report, Moody’s says the 2011 third-quarter showed continued reserve releases by P&C insurers, but at a lower rate than 2010. “Our preliminary aggregate industry reserve analysis suggests U.S. reserves remain modestly redundant across the industry with larger redundancies in personal auto and medical professional liability.”

Moody’s adds that standard commercial lines remain slightly redundant, but some line such as workers’ compensation and general liability have deficiencies in recent accident years.

Moody’s says that while 2011 will be remembered for significant catastrophes, it may also be remembered for the industry reaching an inflection point for pricing after multiple years of declines. “The recent stabilization in pricing and relatively benign loss costs should help stem deterioration in future underwriting performance as the premiums are earned,” Moody’s says. “However, P&C insurers face headwinds from weak underwriting margins year-to-date, low investment yields and sluggish economic growth.”

Moody’s believes these challenges should help fuel further price increases for P&C insurers.