Property-Casualty Insurance Reserve Position Improved Dramatically in 2003

But Are the Improvements at an End?

(Hartford, CT) January 4, 2005 – Reserve deficiencies, which have plagued property-casualty (P-C) insurers in recent years, improved dramatically in 2003, according to a new study by Conning Research & Consulting.

The Conning Research study, “Property-Casualty Loss Reserves: As Good as It Gets?” estimates P-C reserve deficiency improved nearly $17 billion from $24.8 billion in 2002 to $8 billion in 2003.

“Thanks to stronger pricing and resulting premium growth in the P-C industry, reserves have kept pace with losses and older years have been strengthened,” said Geri Riley, analyst at Conning Research & Consulting. “The improvement in the reserve position for the property-casualty industry has been rapid and all-encompassing, leaving no line of business unaffected. Yet while there has been significant improvement, additional reserve strengthening is still needed.”

Conning’s annual study on the reserve position of the P-C industry is based on extensive analysis of Schedule P of the annual statement, which includes ten years of historical data and analysis of paid and incurred loss developments for the casualty and liability lines. Asbestos, reinsurance, property, financial and combined specialty lines are not included in the new study, primarily due to lack of availability of historical and complete reserve data within schedule P.

“Our study confirms that through 2003 the property-casualty industry has made significant progress in addressing its reserve deficiencies,” said Stephan Christiansen, research director at Conning Research & Consulting. “Yet with competition accelerating in the second half of 2004, there are indications of reductions in reserve strengthening and premium rate declines in the face of loss growth. When rates do not keep pace with loss growth, there is certainly reason for concern about the industry’s loss reserve position going forward.”

“Property-Casualty Loss Reserves: As Good as It Gets?” is available for purchase from Conning Research & Consulting, Inc., by calling (888) 707-1177 or by visiting the company’s Web site at

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.