Moody’s changes 2024 P/C outlook to stable

Moody's Ratings changed its outlook for the U.S. property/casualty personal insurance sector to stable from negative. This reflects continued improvement in underwriting results
as insurers have significantly increased pricing in both personal auto and homeowners to
address high auto repair and construction costs, high catastrophe and non-catastrophe
weather losses and elevated reinsurance costs. Moody's expects that enhanced underwriting results coupled with higher net investment income will help personal lines insurers maintain or
strengthen their capital levels,

• Personal auto profitability will continue to improve; some insurers shift toward
  growth. U.S. personal auto insurers have responded to high loss cost trends by aggressively
  raising rates and taking other underwriting actions to improve profitability. According to
  Moody's yearly rate change and trend surveys for rated insurers, companies are seeking auto
  rate increases of about 11% in 2024, which is down from 14% for 2023 but still elevated
  compared to a pre-pandemic average around 4.5%. Moody's estimates that the industry's
  combined ratio for personal auto will fall below 100% in 2024 for the first time since 2020.
  Several industry leaders will pursue growth in states where they have achieved rate adequacy.
• Home insurers hike rates and coverage levels to enhance underlying profitability.
  Companies will continue to raise rates in 2024 by about 13.5% according to Moody's rate change and trend surveys. This is slightly lower than in 2023. They are also tightening terms and conditions and boosting catastrophe budgets for weather-related perils such as severe convective
  storms, wildfires and extreme precipitation. Although primary insurers are retaining higher
  proportions of their gross catastrophe risk given firm reinsurance pricing, they are buying
  more coverage at the tops of their programs to protect against severe events. Insurers are
  also non-renewing homeowners policies in some catastrophe-prone areas.
• Continued strong premium growth even as economic growth slows slightly. P/C
  premium growth varies with macroeconomic factors and claims experience, including
  catastrophe losses. Moody's forecasts that U.S. real gross domestic product growth will slow slightly to about 2.4% in 2024 from 2.5% in 2023. Given pricing increases in excess of inflation, premium growth will easily outpace GDP growth through at least 2024.
• Solid balance sheets; higher investment income to support earnings. Although capital
  has declined for some personal lines insurers, Moody's expects most companies to maintain or
  strengthen capital levels through strong earnings. Companies generally have solid balance
  sheets with manageable gross and net underwriting leverage, high-quality investments, and
  good liquidity.