Thursday, October 20, 2011

Quarterly Commercial Rates Up for 1st Time Since 2003

This graphic speaks for itself and presents the results of the 3rd quarter 2011, Council of Insurance Agents & Brokers rate survey.  It’s clear a market turn has begun and all insurance producers should think seriously about managing expectations of their client base by advising them of the impact of such a turn.  It is still early days and how quickly and how far this change will go is presently unknown.  However, it’s clear a turn has begun.  This is the result of years of under pricing of commercial insurance products, sustained low investment income, reduction of excess claim reserves, all exacerbated by significant U.S. and worldwide catastrophe losses that have occurred over the last 18 months.

- Jerry Sullivan 

Monday, October 10, 2011

U.S. Property & Casualty Industry Cash Flow

These graphics present both detailed and net quarterly cash flow data for U.S. Property & Casualty insurers as of June 30, 2011.  Operations have suffered from the impact of the many catastrophes (tornadoes, floods and wild fires) experienced during the first half of the year contributing only $1.3 billion in the 2nd quarter.  Investments provided almost $2.7 billion in the 2nd quarter but is expected to turn negative in 3rd quarter reflecting the recent difficult investment markets.  Financing activities drained cash of nearly $5.8 billion in the 2nd quarter including dividends to stockholders of almost $5.4 billion. 
Thus the net cash flow as of the 2nd quarter was a negative $1.8 billion.  More importantly is that the industry has experienced negative cash flow in 6 of the last 10 quarters, a sure indication that the market is about to turn.