(Hartford, CT) December 20, 2004 – After two decades of poor financial results, the homeowners line is finally in the “sweet spot,” according to a new study by Conning Research and Consulting, Inc.
The Conning Research study, “Homeowners Insurance: The ‘Curse’ Is Reversed Until 2008,” predicts a ratio of 104.5% in 2004 despite some of the worst catastrophe losses on record. The outlook is bright for 2005-2007, due to a favorable underwriting environment and a surge in insurer sophistication.
“From 1980 to 2002, the homeowners line found a way to lose money almost every year, often with new causes emerging just as older causes appeared to be solved,” said Bruce Hale, analyst at Conning Research & Consulting. “Insurers brought many of these problems upon themselves. While some remedial actions began in the mid-1990s, the rewards only became noticeable in the profitable 2003 results.”
However, the Conning study predicts an end to the recovery by 2008, since some of the current favorable factors are temporary opportunities. The turnaround will then be replaced by the old, margin-squeezing business cycle, according to the study.
“While the homeowners recovery is impressive, it appears that, overall, the line will revert to traditional market cycle dynamics,” said Stephan Christiansen, research director at Conning Research & Consulting. “Yet by analyzing those same dynamics, effectively managed market leaders can succeed in avoiding the pitfalls and ensuring their long-term returns.”
“Homeowners Insurance: The ‘Curse’ Is Reversed Until 2008” is available for purchase from Conning Research & Consulting, Inc., by calling (888) 707-1177 or by visiting the company’s Web site at www.conningresearch.com.
About Conning Research & Consulting, Inc.
The Conning name has represented excellence in independent insurance industry research for more than 90 years. As a result of its wealth of experience and intimate knowledge of the insurance industry, Conning understands industry challenges and opportunities and can provide in-depth insights and analyses. Conning provides both public and proprietary research as well as consulting services to the financial services industry. Conning is headquartered in Hartford, CT.