A.M. Best Special Report: Surplus Lines Insurers Weather Soft Market With Profits Intact.OLDWICK, N.J. -- Property/casualty insurance rates are in wide retreat, but surplus lines insurers maintained adequate pricing through 2006. Catastrophe exposed coastal property remained a notable exception to the market's softening--a benefit to surplus lines writers, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a special report by A.M. Best Co. * Surplus lines grew 173% among domestic professional carriers over the past five years, far faster than the total U.S. property/casualty market. * A.M. Best expects continued positive underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. returns for surplus lines, driven by adequate rates, disciplined underwriting and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. prior year loss reserve development. * The surplus lines industry again posted strong underwriting results in 2006, with a combined ratio of 79.6 for domestic professional writers, aided by light catastrophe losses and disciplined underwriting. * Surplus lines writers maintained strong risk-adjusted capitalization after posting modest growth in surplus in 2006, driven by strong operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before and capital gains. * The top three U.S. surplus lines groups in 2006 were unchanged from 1996: American International Group
American International Group, Inc. (AIG) (NYSE: AIG; TYO: 8685 ) is a major American insurance corporation based in New York City. , Lloyd's and Zurich Financial Services Zurich Financial Services Group is a major financial services group based in Zurich, Switzerland. Global operations North America The US consumer market is served primarily by Farmers Insurance Group the third largest personal lines property & casualty insurance Group. * No financial impairments were reported in 2006 among surplus lines companies, which have outperformed the total property/casualty industry in this regard in recent years. * The Nonadmitted and Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Reform Act, pending in Congress, remains a top legislative priority as the surplus lines industry seeks uniformity in the now fragmented system of regulation and taxation applied to the industry. BestWeek subscribers can download a PDF (Portable Document Format) The de facto standard for document publishing from Adobe. On the Web, there are countless brochures, data sheets, white papers and technical manuals in the PDF format. copy of all full special reports at no additional cost or a combination of the PDF copies plus all related spreadsheet files of the report data at no additional cost from our Web site at www.bestweek.com. Nonsubscribers can download a PDF copy of the full special report (40 pages) for $110 or a combination of the PDF copy plus the spreadsheet file of the report data for $330 from our Web site at www.bestweek.com. Call customer service for more information, (908) 439-2200, ext. 5742. Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com. |
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