Conning forecasts profitable 2005 and leaner 2006

A study of the North American property and casualty insurance industry by Conning Research and Consulting predicts that insurers will enjoy a second year of underwriting profit for 2005, assuming that catastrophic losses remain in the normal annual range of US$13-$14 billion. "Higher prices, tighter covers and more effective deductibles are the key contributors to industry performance in the 2004/5 period. Despite a softening market, we fully expect that the underwriting profits of 2004 will continue at least into 2005," says Stephan Christiansen, director of research at Conning.However, Conning is not that optimistic that insurers will be able to maintain the strengthening of underwriting profitability. "softening market conditions will ultimately begin to chip away at the industry’s record performance. Our analysis suggests that 2006 will be the first year of deterioration," comments Christiansen.