Fitch Changes P/C Insurance Industry Sector Outlook to Negative
"The
While market conditions are likely to worsen, Fitch maintains the stable rating outlook for both the commercial and personal lines sectors of the
The P/C industry is likely to generate a statutory combined ratio below 100% for the fourth consecutive year in 2016. However, underwriting profits will prove very modest as the combined ratio forecast is over 99%. Fitch is projecting an underwriting loss in 2017 with the combined ratio reaching 101%.
Near-term underwriting results will also be influenced by changes in reported loss reserve development. The P/C industry has benefited from a decade of favorable reserve development experience. However, industry reserve strength diminished marginally over time and most recent accident year business is unlikely to exhibit the strong redundancies of prior hard market periods.
Weaker underwriting performance, combined with a reduced contribution to earnings from investment results, is placing considerable pressure on P/C insurer profitability. The industry statutory return on surplus is projected to decline to 6.6% in 2016 from 8.5% in 2015 and fall further in 2017. If larger underwriting losses and even lower sustained returns on surplus (below 4%) emerge beyond 2017, Fitch's industry rating outlook could move to negative, and more individual ratings could be affected unfavorably.
Auto underwriting continues to remain weak. Commercial auto is a chronic underperformer. Competitive pressures and unfavorable claims trends are likely to hinder a return to underwriting profits in personal auto in 2017.
Catastrophe losses for the industry increased to
"The P/C industry continues to undergo technological change particularly in the areas of distribution, policyholder interaction, risk selection tools, pricing and claims adjudication, and policy administration. While Fitch does not expect technology investments to necessarily lead to long-term return on capital improvement, keeping pace with technology is essential for expense structures and to minimize adverse selection risk," added Auden.
The full report '2017 Outlook:
Additional information is available at 'www.fitchratings.com'.
2017 Outlook:
https://www.fitchratings.com/site/re/890838
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
Copyright © 2016 by Fitch Ratings, Inc.,
The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from
For
View source version on businesswire.com: http://www.businesswire.com/news/home/20161130005844/en/
Fitch Ratings
James B. Auden, CFA
Managing Director
+1-312-368-3146
or
Director
+1-312-368-3263
or
Media Relations
[email protected]
Source: Fitch Ratings
Cigna Launches One Guide – Simplified, Personalized Service to Help Choose a Health Plan, Improve Health and Reduce Costs
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News