Personal lines outlook stable, S & P’s

The outlook for personal lines insurers is stable, according to Standard & Poor’s Ratings Services midyear 2006 outlook report.The report titled “U.S. Personal Lines Midyear 2006 Outlook: Low Volatility Means Few Raings Changes in 2006” indicates the second half of 2005 may have been one of the most challenging on record for U.S. personal lines insurers, with more than US$57 billion in catastrophic losses recorded. “An analysis of industry trends in 2005 is currently pointing toward low volatility over the next six months for this segment of the industry,” S & P’s credit analyst Polina Chernyak says. “Combine that with strong first-quarter revenues and earnings, and Standard & Poor’s is reiterating its stable outlook for personal lines companies, thus implying few if any ratings changes for the rest of the year.” In this report S & P’s points out that not every personal line segment will perform uniformly. In the hardening homeowners’ line, higher deductibles and tighter underwriting have produced strong performance numbers in the past few years. For the rest of the year, S & P’s says adequate pricing, prudent underwriting, and the sizable 2005 unearned premium reserve (excluding catastrophe) should help generate strong year-end results, and have already been factored into our ratings and outlook.