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FOR IMMEDIATE RELEASE
OLDWICK - DECEMBER 13, 2016 10:18 AM (EST)
A.M. Best has maintained a negative outlook on the commercial lines segment of the U.S. property/casualty industry for 2017, reflecting continuing pressure points that are likely to drive deterioration in results through the year.
The Best’s Briefing, titled, “Commercial Lines Outlook Remains Negative as Market Conditions Become Increasingly Competitive Across the Segment,” states that the segment is being impacted by intensifying price competition in most lines, decreasing levels of favorable development of prior years’ loss reserves and persistently low investment yields, as well as a return to a more historically normal level of catastrophe losses.
Overall, the segment’s profitability remains solid, but these results continue to be driven primarily by dominant players that have established defensible positions and whose results reflect consistent underwriting fundamentals and income generated by conservative investments.
Workers’ compensation and general liability rates remain under pressure and most property lines of business continue to see rate reductions. While commercial automobile rate achievement remains well above the industry average, price adequacy in this line remains a challenge for some companies as a result of continuing elevated frequency and severity trends. Those companies that have developed capabilities to effectively establish technical price and maintain underwriting criteria will be best-positioned to manage the competitive phase of the market cycle.
With operating performance, business profiles and enterprise risk management capabilities remaining in line with expectations, A.M. Best anticipates that the majority of rating actions in this segment will be affirmations. However, as performance metrics deteriorate for companies that are in a weaker competitive position, these companies may also face lower risk-adjusted capital levels, all of which would lead to the potential for negative rating actions.
To access the full copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=256765 .
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.