Fitch: Excess & Surplus Lines Premiums and Profits Grow

CHICAGO--(BUSINESS WIRE)-- The U.S. excess and surplus lines (E&S) market continues to serve as an important specialized source within the broader property/casualty insurance market for unique or harder to place risks, according to Fitch Ratings. In a new special report: 'U.S. Excess and Surplus Lines Market Review', Fitch examines recent trends in the E&S market, with particular focus on revenue and underwriting performance for the overall industry and the largest individual insurer market participants.

E&S business represent a relatively modest 5% of total U.S. property/casualty (P/C) insurance industry direct premium volume. However, direct E&S written premiums expanded by 6% to $29 billion in 2014 and are up 5% for the first half of 2015 compared to the first half of 2014.

Higher E&S premiums were driven by rising rates in various lines, increased exposure due to a continued, albeit slow, economic recovery and a reduced appetite from standard carriers to write nonstandard risks. However, rate increases have slowed and flattened in some segments, particularly commercial property.

Barring any unusually severe catastrophic events underwriting profitability is expected to be sustained in 2015 following a strong 2014 performance that beat the P/C industry aggregate by approximately 8 percentage points on a direct combined ratio basis.

Premium growth is expected to continue into 2016, led by exposure growth in accordance with modest economic expansion with a reduced contribution from price movements. Profitability is likely to weaken for E&S writers in 2016 as pricing pressure and diminishing favorable loss reserve development reduce underwriting performance, and continued low asset yields adversely affect investment income.

The full report is available at 'www.fitchratings.com' under 'Insurance' and 'Research'.

Additional information is available at 'www.fitchratings.com'.

U.S. Excess and Surplus Lines Market Review (Strong Market Performance: Growing Capacity, Pricing Pressures Challenge Future Profits)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=870118

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View source version on businesswire.com: http://www.businesswire.com/news/home/20150902006463/en/

Fitch Ratings
Gerald B. Glombicki, CPA
Director
+1-312-606-2354
Fitch Ratings, Inc.
70 West Madison St.
Chicago, IL 60602
or
James B. Auden, CFA
Managing Director
+1-312-368-3146
or
Media Relations
Alyssa Castelli, New York, 1-212-908-0540
[email protected]

Source: Fitch Ratings

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