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Fitch: P&C Outlook Negative

Fitch Ratings reported that its outlook on property and casualty insurers was negative, and the firm expects the sector to post an underwriting loss in 2017...
December 8, 2016

Fitch Ratings reported that its outlook on property and casualty insurers was negative, and the firm expects the sector to post an underwriting loss in 2017. Car and home insurance companies are likely to continue struggling in their efforts to earn higher profits, as competition keeps price increases lower and low rates continue to have a negative impact on investment returns. Both sides of the business are facing pressure with strong competition and a lack of major losses weighing on prices for most types of insurance, said Fitch.

On the investment side, persistent low interest rates have pushed the industry’s pretax investment yield down to 3 percent this year, down from more than 4.5 percent in 2006. Most property and casualty insurers have stable outlooks for the coming year, and many have large reserves and can absorb losses. However, the incoming Trump administration also adds uncertainty given that insurers are sensitive to economic growth, which affects demand for insurance, and wage growth, which affects workers’ compensation coverage, said Fitch.

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