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FOR IMMEDIATE RELEASE
OLDWICK - DECEMBER 13, 2016 11:19 AM (EST)
A.M. Best has maintained a stable outlook on the personal lines segment of the U.S. property/casualty industry for 2017, citing that personal lines companies on the whole are responding in an appropriate manner to address the ongoing financial and operational pressures impacting today’s challenging market conditions.
The Best’s Briefing, titled, “Personal Lines Outlook Remains Stable Despite Continuing Pressure on Automobile Results,” states that the underwriting performance of the automobile line, which comprises the majority of premium in the personal lines segment, generally has been consistent. However, combined ratios for the personal automobile line of business have deteriorated over the last couple of years due to frequency and severity pressures.
Nevertheless, generally strong property performance has mitigated some of the deteriorating automobile performance, which allowed the overall segment to achieve underwriting profitability and buttress its surplus position. Increased pricing sophistication, expanded use of by-peril rating, more focused underwriting inspections and favorable reinsurance pricing contributed to the improved property results.
A.M. Best anticipates modest upward interest rate increases in 2017, although, reinvestment is still likely to be at lower rates than maturing bonds. With this in mind, companies must continue to rely on their underwriting prowess to drive overall results.
With operating performances, 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=256762 .
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.