It’s all looking good for Australia’s general insurance industry this year, says ratings agency Standard & Poor’s (S&P). A new report on the sector by S&P Director Michael Vine says the industry’s strong performance is likely to continue despite recent indications of the insurance cycle peaking.

The sector has reported robust earnings, with major participants exceeding market expectations or prospectus forecasts and, in some cases, repatriating dividends to offshore parents for the first time in some years.

“The most telling feature of this stellar performance is in the combined ratio measure of claims and expenses to earned premiums – all of the five major participants recording underwriting profits with ratios under 95% for the 2003 period after a decade of underwriting losses,” Mr Vine said.

“Today’s alignment of healthy premium rate increases, relatively low catastrophe incidence and improving investment climate sharply contrasts the simultaneous negatives of recent years – large payouts on catastrophes, soft premium rates, and declining investment markets.”

So S&P says the industry is maintaining its “stable” ratings outlook and acknowledges the improved industry dynamics “which should underpin continued strong operating performance. These dynamics include heightened regulatory measures; greater local listed ownership and the associated demand for shareholder returns; expense efficiencies from scale through legacy system consolidation; and a generally lower-risk investment asset profile.”