How U.S. P/C Commercial Insurers Will Fare Through 2019: Moody’s

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The outlook for the U.S. property/casualty commercial insurance sector for the next 12 to 18 months remains stable given healthy core earnings and sound balance sheets in the view of analysts at Moody’s Investors Service.

“Commercial insurers held up well despite the large catastrophes of 2017 and will generate good core earnings in 2018-19,” says Bruce Ballentine, vice president and senior credit officer at Moody’s. “Insurers will benefit from higher rates in property lines and stable-to-rising investment yields, tempered by slightly worse combined ratios in casualty lines.”
Analysts define a positive picture. Pricing for commercial lines is more advantageous than it has been in recent years. The real estate agency is higher after the disasters of 2017, but there are no more disasters than the rating agency expects to face downward pressure to be revised until 2019. Kazazedeler is seeing a slight uptrend in aggregate, with high single digit increases in total and modest decreases in workers’ compensation.

As a fund for the industry outlook, Moody’s estimates that the US real GDP growth will be 2.9 percent in 2018, 2.3 percent in 2019 and 2 percent in the next two years. Nevertheless, Ays Moody’s will accelerate growth in expanding US and global economies, insured risks and related commercial line premiums.

Moody’s said insurance companies are waiting to bribe their appetite for investment risk as insurance companies improve with rising market interest rates. Insurers have increased their allocations to high-risk investments over the last few years as market interest rates have fallen.

Insurers ‘loss reserves are sufficient for commercial auto, for workers’ compensation, and for other lines, moderately unneeded, and generally less than Moody’s damage estimates.

Moody’s also hopes that insurance companies will continue to invest in data and analytics, robotics automation, mobile solutions and other technologies and will use technology to better interact with customers, develop new products, work more efficiently and manage risks.

As a fund for the industry outlook, Moody’s estimates that the US real GDP growth will be 2.9 percent in 2018, 2.3 percent in 2019 and 2 percent in the next two years. Nevertheless, Ays Moody’s will accelerate growth in expanding US and global economies, insured risks and related commercial line premiums.

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