The US real estate industry experienced a small insurance gain in 2018 after the following year of losses caused by natural disasters, with further improvements expected in 2019, according to Fitch Ratings Inc.
The industry logged a statutory combined ratio of 99.3% in 2018, corresponding to an improvement over the 103.9% reported in 2017, largely due to a reduction in disaster loss experience, the Chicago-based rating agency said on Thursday in a report. But property / non-life insurance companies suffered significant catastrophic losses again in 2018, with major incidents including hurricanes Florence and Michael and California, according to the report.
U.S. The property / non-life insurance companies also reported favorable premium increases in 201
Meanwhile, the positive reserve trend continued in the 13th consecutive year, as the industry reported $ 12 billion in previous year's releases, the report said.
"Improved insurance performance the industry achieves stronger profits, and this profit level is likely to be sustainable until 2019," says James Auden, Chicago-based CEO, insurance at Fitch Ratings, in a statement.
Written premium development is expected to remain good next year , but during the 2018 levels with direct and net contributions, it is expected to increase by about 4%, while Fitch forecasts that the industry's insurance result will continue to improve to a total ratio of 98.5% for 2019, according to the report. by 50% from the year before more than $ 60 billion, while statutory return on surplus of 8.1% to
"While market pricing improved in many areas in 2018, it is not obvious that it is clear for a true tough market environment" , Fitch says in the statement. "Although some insurers can create poor return on capital under current conditions, others face challenges that provide sufficient profit. Market fundamentals support similar industry performance in 2019. However, Fitch Ratings anticipates that competitiveness forces will promote price reductions or slow down to look further, which will likely promote profit weakening. "
" With catastrophe losses still above historical standards, short-term housing disasters are still the main source of industry volatility, the statement continued. "Managing over average catastrophe-induced losses over the past two years gave a demonstration of the industry's capital abilities against side effects. However, the potential for significantly larger market losses associated with hurricane and earthquake events remains a problem."
Fitch maintains a stable outlook for the US the real estate and accident industry and most individual ratings in the sector due to high balance sheet quality and relative stability in operational performance, said the rating agency.