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P/L Insurers Try to Maintain Profits In Softening Market

The U.S. personal lines insurance sector is at a critical juncture, according to an article published by Standard & Poor's Ratings Services. The article, which...
December 11, 2007

The U.S. personal lines insurance sector is at a critical juncture, according to an article published by Standard & Poor's Ratings Services. The article, which is titled "2008 U.S. Personal Lines Outlook: A Quiet Year Fuels Profits, Though Softening Prices Loom," says that with the shift to soft market conditions nearly complete, companies in this sector are pushing hard to achieve profitable growth and preserve their competitive positions while maintaining pricing and underwriting discipline.

"We believe pricing will continue to support healthy underwriting returns and solid earnings in 2008--as long as catastrophe losses remain normal," S&P wrote.

"However, we're concerned about the long-term sustainability of earnings and returns, as we don't believe the sizable profit margins of the recent past will continue because of intense rate competition, especially in the auto market, and less available new business growth."

The outlook on the U.S. personal lines sector will remain stable as long as carriers remain disciplined and committed to adequate risk-adjusted pricing, S&P says.

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