Fitch on U.S. P/C Insurers: Underwriting Results to Improve in '03; Rating Outlook Remains Negative.Business Editors CHICAGO--(BUSINESS WIRE)--May 9, 2003 Fitch Ratings' current estimate is that the domestic property/casualty insurance industry will experience an improvement in the combined ratio to 103.9% in 2003 from 107.2% in 2002, with an increase in premium volume of approximately 10% in 2003, 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 new report. Although, this represents a significant improvement in 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. performance from 2000 and 2001, these results are still insufficient for producing an adequate return on capital. 'The U.S. property/casualty insurance industry made a significant recovery in 2002, following its worst year ever in 2001,' said James Auden, Senior Director, Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. . 'We believe that 2002 was a transition year for the property/casualty markets, as companies restored underwriting disciplines in response to the more apparent poor pricing of recent years and barring any unusual large catastrophe losses, operating results should improve further in 2003.' Fitch believes due to recent investment results and the current economic and investment climate, it is unlikely that investment performance will improve significantly for the industry over the near term. With new money rates remaining low, the property/casualty insurance industry needs to boost profitability and earned surplus Earned surplus See: Retained earnings earned surplus See retained earnings. by generating underwriting profits Underwriting profit is a term used in the insurance industry. It consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted. It does not include any investment income earned on held premiums. . Based on Fitch's estimate of 2002 accident-year results, and a continued hardening hardening, in metallurgy, treatment of metals to increase their resistance to penetration. A metal is harder when it has small grains, which result when the metal is cooled rapidly. pricing environment, companies that are unfettered by prior period underwriting and reserving problems should be able to produce favorable results in 2003. Fitch maintains its Negative Rating Outlook in the property/casualty commercial lines 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. sectors, expecting a reduction in ratings actions in 2003 but still a greater number of downgrades than upgrades. Fitch's Rating Outlook for the personal lines sector remains at Stable, as this sector is less affected by the factors that create uncertainty. The new Fitch report titled 'U.S. Property/Casualty Insurers Year-End 2002 Results' discussing the full-year results for the U.S. property/casualty industry and several prominent industry participants, is available on Fitch's web site at 'www.fitchratings.com'. The report can be found in the 'special reports' section of Fitch's web site corresponding with the 'insurance sector' or by contacting the Ratings Desk at 1-800-893-4824. |
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