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Fitch: Non-Life Insurance Prism Scores Remain Stable.

Chicago: Capitalization continues to be a strength for the U.S. property/casualty (P/C) insurance sector as measured by Prism, Fitch Ratings' proprietary capital model. Risk-adjusted capital positions were relatively unchanged between year-end 2016 and year-end 2015, which was consistent with the operating environment and Fitch's current view of the P/C sector.

Fitch believes year-end 2017 Prism Scores are unlikely to materially change for most insurers despite substantial reported catastrophe losses in the second half of the year. Higher investment gains amidst strong stock market performance and continued stable interest rates are offsetting larger underwriting losses to promote modest capital growth for the year.

"Going into 2017, we felt the industry was very strongly capitalized. Consequently, we found that when companies reported actual catastrophe losses, those results fell within the bounds of those generated by our model," notes Jeff Mohrenweiser, Senior Director in Fitch's insurance ratings group.

The fifth annual special report: '2016 U.S. Non-Life Prism Scores' provides updated Prism scores for a group of 46 U.S. P/C groups. The large majority of these insurers maintained scores of "Strong" or better. Prism derives a unique profile for each insurer based on their experience. Thus, any incremental improvement in Prism Scores in 2016 was due to the insurer's operational performance and not caused by significant changes in risk profiles or model changes.

In addition to the published scores on individual groups, the report's exhibits discuss year-to-year changes in available capital (AC) and target capital (TC) for the subject group of insurers. The allocation of target capital across major modeled risk factors, including underwriting, natural catastrophes, reserves and asset risk, is also shown along with the distribution of key model parameters across the universe. Finally, there is a comparison and alignment of Prism Scores to other capital adequacy metrics.

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Publication:Daily the Pak Banker (Lahore, Pakistan)
Date:Mar 15, 2018
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