S&P downgrades outlook for US commercial insurers
Standard & Poor’s has downgraded its outlook on the US commercial lines insurance sector from stable to negative as concern persists over declining prices and investment income.
S&P New York credit analyst John Iten says speculation that rate reductions are on the way out in the US has failed to materialise.
“Rates are still declining steadily,” he said. “We do not see anything reversing the general downward direction of rates over the next six to 12 months.”
The ratings agency says prices continued to decline during the second quarter, though at a more moderate pace than previous quarters.
Renewal rates fell by mid-single digits in most lines and low double-digit rates for new business. Though the combined ratio remains under 100%, the decline in rates is expected to have a negative effect on underwriting results over the next 12 to 18 months.
S&P last revised its outlook on the US commercial market in 2005, when it upgraded the outlook from negative to stable as concern eased following a regulator investigation into industry bid-rigging.
S&P New York credit analyst John Iten says speculation that rate reductions are on the way out in the US has failed to materialise.
“Rates are still declining steadily,” he said. “We do not see anything reversing the general downward direction of rates over the next six to 12 months.”
The ratings agency says prices continued to decline during the second quarter, though at a more moderate pace than previous quarters.
Renewal rates fell by mid-single digits in most lines and low double-digit rates for new business. Though the combined ratio remains under 100%, the decline in rates is expected to have a negative effect on underwriting results over the next 12 to 18 months.
S&P last revised its outlook on the US commercial market in 2005, when it upgraded the outlook from negative to stable as concern eased following a regulator investigation into industry bid-rigging.