NEW YORK CITY (Jan 12): Three-quarters of executives from the US property insurance industry expect profitability to improve this year, amid widespread signs of a return to pricing power, the Insurance Information Institute said on Wednesday.

Reporting the results of a survey at its annual industry forum, the III also said that nearly 80% of executives expect the industry's combined ratio — a measure of claims and expenses as a percentage of every dollar collected in premiums — to fall.

When the combined ratio is under 100, insurers are collecting more in premiums than they are paying out in claims and expenses. But with a long list of natural disasters last year, the industry's combined ratio for much of 2011 topped 108.

The III also surveyed executives on merger activity, with 71% saying they did not expect an increase in consolidation. Analysts have been eagerly awaiting a round of consolidation for some time, as insurers with cheap valuations and excess capital have looked ripe to snap each other up.

But valuations have remained so depressed that many executives have said deals make no sense in this environment.

One thing that could improve valuations is a return to pricing power, after years when excess capital and heavy competition kept pricing on the decline. Roughly 72% of those surveyed said the industry was on the road to recovery, or what insurers call a "hard market". — Reuters

SHARE
SPONSORED CONTENT
Damayan Residences—new freehold sanctuary in Subang Jaya, where urban energy meets nature’s calm

With just 308 units within a single block, this development gives you a level of privacy and exclusivity rare in today’s urban market, with a walking-distance LRT station to boot.

read more