North American p&c insurance market stable, S & P’s

The outlooks on both personal and commercial lines of the property and casualty insurance sector remain stable, according to a recent report published by Standard & Poor’s Rating Services. This stability is, according to the report titled “Industry Report Card: North American Insurance Holding Companies Cope With Various Sector-Specific Issues,” due to the fact that more moderate price declines have been seen during the year. Also buoying this stability is S & P’s expectation that hurricane claims activity will result in pricing increases. In response to the hurricane-related catastrophes of 2005, S & P’s says the 2006 p&c marketplace is moving toward a hardening cycle. Subsequent rate increases of the hardening market are, according to S & P’s, “considered necessary in light of the catastrophe modeling assumptions having demonstrated serious shortcomings.”On April 5, 2006, S & P’s revised its outlook on the global reinsurance industry back to stable because of the strong industry fundamentals and the resolution of some of the short-term uncertainties created by the unprecedented scale of the losses arising from the 2005 North American hurricane season. S & P’s says the stable outlook reflects the current, predominantly stable nature of its ratings on reinsurance companies and implies that there will be little near-term movement in ratings or outlooks. Nevertheless, S & P’s says that despite this stable outlook, the industry is in a period of transition and faces many challenges.