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Property and casualty insurers in north americans are resilient

by

Justine Montminy

January 12, 2018 09:45

The many natural disasters of 2017 have called into question the solidity of the capital of the insurers of the damage in north america at the beginning of 2018. In spite of everything, a report from S&P Global Ratings shows that even if they passed a test of capital more stringent, the financial statements of insurers would remain solid.

«In order to determine when insurers in north america are compared to our last test of resistance in the capital in 2014, we’ve added a third element to the test [to make it more rigorous],» says Patricia Kwan, credit analyst for S&P Global Ratings.

Half of the insurers pass the more rigorous test

Most property and casualty insurers, the United States continues to display a strong buffer of capital, despite the criteria, the more extreme of the test. A little less than half of the insurers noted would remain in their rating class.

However, if insurers had kept the returns to capital that would normally be distributed to shareholders, two-thirds of the insurers would maintain their ratings. The report thus demonstrates that it is unlikely that the notes of the insurers is changing due to pressures on their capital caused by the events of the last year.

Maintaining profitability

According to estimates preliminary S&P’s Global Ratings, the combined ratio of property and casualty insurers in the United States is estimated to be around 105 %. Approximately 10 % of this figure would be attributed to natural disasters. In comparison, the combined ratio of the past year was 101 %.

Similarly, the report indicates that the favourable economic conditions have contributed to maintaining the profitability of insurers, in addition to a buffer of greater equity.

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