Chris Klein, Director of Reinsurance Markets
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Casualty

US Casualty

At the July 1 renewals the US casualty lines continued to demonstrate a soft pricing environment with few changes seen from the prior renewals in the year. The direct market showed a general improvement in profitability as underwriting results and net investment gains increased. This occurred as premiums declined, further impacting a soft reinsurance pricing environment. A recent development is a slowing in the decline of the subject premium base for many casualty lines. It appears to be stabilizing (even increasing in some lines) as a result of the recovering economy.

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Primary insurers are operating in a competitive pricing environment with declining exposure bases putting their premium income under pressure. Particularly in the large to mid-size insured environment there is aggressive competition for new business that is preventing rate increases and in many instances resulting in rate decreases, especially if insureds have not obtained competitive bids in the last few years. In the small insured and personal lines business there is more stability and in some instances rate increases were warranted because of loss experience. The outlook for primary insurers in 2010 is for continued flat to 5 percent decreases in average rate due to a strong competitive environment, subject to remaining above minimum premiums or a substantial change in exposure bases.

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