Declining reserve releases could cut earnings by 6%
Wednesday, 05 04 2016, Category: Insurance and Reinsurance, Country: World
Analysts at Morgan Stanley predict that reserve releases will progressively decline in the coming months and years, contributing to as much as a 6% decline in P&C insurance and reinsurance earnings.
Morgan Stanley has issued a warning to property and casualty (P&C) insurance and reinsurance firms following the recent high levels of reserve releases, a trend that has been driven by firms seeking to bolster results as low inflation, benign losses, competition, and ultimately depressed rates contribute to low profitability.
Analysts from the firm warned earlier this year that the reserve releases for P&C reinsurers are expected to shrink through the next few years, contributing to a declining portion of companies’ operating income.