With 2012 US preliminary results now showing the effects of sustained improvement in profitability, Conning forecasts continued strong net premium growth and a substantially improved combined ratio for 2013. The forecast improvement is based on sustained pricing increases and an expectation of a normal level of catastrophe losses, according to the most recent edition of Conning's Property-Casualty Forecast & Analysis.
"Stronger preliminary results for 2012 despite Superstorm Sandy-a 6% return on equity and a 103 combined ratio-reinforce that the effect of price increases and improved underwriting are taking hold throughout the industry," said Steven Webersen, managing director at Conning. "Conning's 2013 property-casualty forecast is for net premium growth to accelerate at a 4.6% rate over prior year based on continued rate increases. For 2013 we forecast an improved combined ratio of 101, assuming a normal level of catastrophe losses. However, low investment yields continue to work against the industry's efforts to return to a reasonable return on equity, and maintain the pressure on underwriting and pricing to sustain profitability."
The quarterly service, "Property-Casualty Forecast & Analysis by Line of Insurance" forecasts industry and line of business growth and performance for 2013-2015. The comprehensive forecast and report is redeveloped quarterly by Conning using its proprietary property-casualty industry model and analysis of key industry drivers and data.
"Looking further out, we forecast property-casualty premium growth of 4.8% in 2014 and 4.9% in 2015," said Stephan Christiansen, managing director at Conning. "We expect sustained rate increases to improve underwriting results to near breakeven by 2014. However, weak economic conditions and a record level of capital in the industry will inhibit further improvements in industry premium growth and pricing necessary to achieve underwriting profitability and a reasonable return on equity."
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