A.M. Best Maintains Stable Outlook on U.S. Commercial Lines
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Copyright 2009 A.M. Best Company, Inc.All Rights Reserved BestWire
March 4, 2009 Wednesday 10:21 AM EST
324 words
A.M. Best Maintains Stable Outlook on U.S. Commercial Lines Market
James Peavy
OLDWICK, N.J.
A.M. Best Co. has completed its assessment of the U.S. commercial market and continues to view the outlook as stable despite the ongoing soft period in the cycle, a contracting economy and the existence of a financial market crisis.
For commercial lines, most key indicators suggest rates will continue to be soft and competitive well into 2009. However, that being said, continued turmoil in the financial markets together with credit tightening and low investment yields has many believing that the end of the soft market could be near. In 2009, Best expects an overall slowing of rate decreases and a flattening of rates for most lines of business.
For the vast majority of commercial lines insurers, investment impairments and mark to market adjustments have been manageable, as balance sheets remain relatively intact with capital levels that remain appropriate for their ratings. On the other hand, earnings prospects for commercial lines insurers are likely to be dimmed by slower growth and less business opportunities via lower payrolls (unemployment / construction) and a decline in gross receipts (slower economic growth). Weaker investment earnings and moderating cash flows are also likely to impact future earnings prospects due to the decline in new money yields.
A.M. Best does not expect rating actions to move profoundly in one direction, with the number of upgrades/positive outlooks and downgrades/negative outlooks to be fairly balanced over the next year. A.M. Best believes the overall commercial lines segment will continue to maintain adequate balance sheet strength, profitability and liquidity in 2009. Additionally, with a modest semblance of stability, price levels continue to support reasonable profitability.
The principal methodologies used in determining these ratings, including any additional methodologies and factors, which may have been considered, can be found at http://www.ambest.com/ratings/methodology.
March 5, 2009
Copyright © 2009 LexisNexis, a division of Reed Elsevier Inc. All Rights Reserved.
Terms and Conditions Privacy Policy
March 4, 2009 Wednesday 10:21 AM EST
324 words
A.M. Best Maintains Stable Outlook on U.S. Commercial Lines Market
James Peavy
OLDWICK, N.J.
A.M. Best Co. has completed its assessment of the U.S. commercial market and continues to view the outlook as stable despite the ongoing soft period in the cycle, a contracting economy and the existence of a financial market crisis.
For commercial lines, most key indicators suggest rates will continue to be soft and competitive well into 2009. However, that being said, continued turmoil in the financial markets together with credit tightening and low investment yields has many believing that the end of the soft market could be near. In 2009, Best expects an overall slowing of rate decreases and a flattening of rates for most lines of business.
For the vast majority of commercial lines insurers, investment impairments and mark to market adjustments have been manageable, as balance sheets remain relatively intact with capital levels that remain appropriate for their ratings. On the other hand, earnings prospects for commercial lines insurers are likely to be dimmed by slower growth and less business opportunities via lower payrolls (unemployment / construction) and a decline in gross receipts (slower economic growth). Weaker investment earnings and moderating cash flows are also likely to impact future earnings prospects due to the decline in new money yields.
A.M. Best does not expect rating actions to move profoundly in one direction, with the number of upgrades/positive outlooks and downgrades/negative outlooks to be fairly balanced over the next year. A.M. Best believes the overall commercial lines segment will continue to maintain adequate balance sheet strength, profitability and liquidity in 2009. Additionally, with a modest semblance of stability, price levels continue to support reasonable profitability.
The principal methodologies used in determining these ratings, including any additional methodologies and factors, which may have been considered, can be found at http://www.ambest.com/ratings/methodology.
March 5, 2009
Copyright © 2009 LexisNexis, a division of Reed Elsevier Inc. All Rights Reserved.
Terms and Conditions Privacy Policy
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