Weak underwriting results continued to dog the property and casualty (P&C) industry in the third quarter, as catastrophic losses from 11 September destroyed the industry's earnings for the year, a new report has said.
The report, from insurance rating agency AM Best, said the fourth quarter was likely to become a dumping ground for reserve and restructuring charges, as insurers wrote off the year and took the opportunity to clean up their balance sheets.
It added that as a result, AM Best had revised its full year combined ratio upward by over 7 points to 118, from its initial estimate of 110.7. This revised estimate includes six points from the 11 September losses.
But the report, "P/C Underwriting Results Continue to Weaken", also found that underlying results began to improve during 2001, as pricing and re-underwriting initiatives took hold.
It said reported results should improve in 2002, as reserve additions subsided and price increases were more fully earned, assuming catastrophes returned to historical levels.
It added that pricing gains had already attracted new capital to the market, and that reinvigorated competition would begin to slow rate gains from the second half of 2002.
Premium growth is expected to peak in 2002, following a projected increase in net premium written of almost 9% in 2001, and then begin to taper off.
