Underwriting continued to improve in the UK non-life market during 2003, said AM Best, but it warned that improvement in results had probably peaked.
It said 2003 had seen a slight continuation in the improvement of underwriting results seen since 2000, but it said on a gross basis, company regulatory returns showed that property was the only major class producing an underwriting profit for the market overall.
This suggested that, unless companies are far more effective than previously in managing business volume through the softening market, aggregate “through-the-cycle” underwriting profitability would remain elusive, said AM Best.
If so, some insurers will find that maintaining the balance between shareholder returns and risk-adjusted capital levels will be challenging.
For property, AM Best said it currently estimated that the 2003 gross loss ratio (GLR) for the whole market was a very strong 55%, continuing the long-run trend that saw property as the only stand-out class for UK underwriters.
Motor results showed a minor weakening, with AM Best's GLR estimate increasing to 75% from 73%, said the company. While some market participants continue to point to a strong pricing environment in motor, overall prices are not keeping pace with loss-cost inflation.
Liability lines overall improved very substantially, it said, with an estimated GLR of 69%, 16% better than in 2002. As for motor, however, the absolute level of losses, while much improved, suggests little more than break-even underwriting.
The full report is available for download from www.bestweek.com.
