S&P’s Property/Casualty Insurance Sector View Improves On Stronger Earnings, Capitalization

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S&P Global Ratings, Princeton, N.J., said its sector view for U.S. property and casualty insurance has improved from negative to stable.

In a new non-rating action, U.S. Property/Casualty Insurance Sector View Improves On Stronger Earnings And Capitalization, (subscription) S&P noted property and casualty insurers have posted a significant improvement in underwriting profitability for personal auto and homeowners’ insurance. the ratings firm said it expects this trend to continue.

“Specifically, underac writing results for personal lines improved due to rate increases insurers implemented and other actions to limit exposure and restore profitability,” the report said. “Commercial lines pricing has softened somewhat but underwriting results remain strong.”

In addition, capital adequacy for some of the rated insurers improved, “in our view, due to a rebound in GAAP (generally accepted accounting principles) shareholders’ equity and changes in our criteria for assessing capital adequacy,” S&P Global Ratings said.

“The current distribution of rating outlooks for P/C insurers–an indicator of potential future rating actions–has a positive bias,” the report said. “However, the majority of our rating outlooks remain stable, so we expect the number of rating changes to be relatively modest.”