Life Insurer Woe Seen; P/C Firms Wield Pricing Power
American Banker (06/05/03) p.17; Gjertsen, Lee Ann

According to Morgan Stanley analyst Alice D. Schroeder, the property and casualty insurance market is not expected to soften in the near future despite indications that some personal lines prices have flattened. The soft market of the 1990s was mostly attributable to high investment returns, a phenomenon that has not resurfaced since the resurgence in premium costs. While most analysts foresee 2003 as an improvement over last year's losses, most conclude that workers' compensation is still a burden for the p/c industry. The life insurance industry appears to be in the most trouble due to poor investments, lower interest rates, and ratings agency pressures. Moreover, analysts note that more and more life insurers will begin taking charges related to guarantees on life and annuity products. Schroeder also points out that the life insurers' rush to demutualize was premature since mutualization has more advantages, especially in a poor market where long-term viability becomes a concern.


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