2010 Property-Casualty Loss Reserves: How Much Do We Believe AIG?


Mike Warner  
Conning, Inc.

Conning Research: Property-Casualty Industry 2010 Loss Reserve Position Deteriorated Slightly

--Results clouded by significant AIG reserve increases
(Hartford, CT) June 8, 2011—The Property-Casualty industry appears to have sufficient reserves, but its position deteriorated slightly in 2010, according to analysis by Conning Research & Consulting.

“Our view of the property-casualty insurance industry reserve position is that it deteriorated slightly in 2010, when compared to our previous annual analyses,” said Stephan Christiansen, director of research at Conning Research & Consulting. “Overall, the industry continues to appear to have sufficient reserves, with a modest degree of safety, under assumptions that claims settlement patterns will continue apace. However, older years continue to develop adversely; and in some lines, this adverse development has expanded again. More significantly, some adverse development in the most recent calendar year is providing a hint that beneficial trends may be turning.”

The Conning Research & Consulting study, “2010 Property-Casualty Loss Reserves: How Much Do We Believe AIG?” analyzes preliminary 2010 statutory data from Schedule P as part of Conning’s ongoing annual review of the balance sheet position of both individual lines of business and the property-casualty industry as a whole.

“AIG, as a leader in commercial lines, significantly increased reserves in 2010, including large additions to older years,” said Christiansen. “We cannot know how much of this may be reflective of emerging information in underlying trends, or a change in methodology in anticipation of changing ownership structure. Our dilemma then is whether to assume the information incorporated in AIG reporting patterns is reflective of the larger industry or a one-time phenomenon. In this review, we provide analysis including and excluding AIG data on the way to reaching a preliminary view on the matter.”

“2010 Property-Casualty Loss Reserves: How Much Do We Believe AIG?” is available for purchase from Conning Research & Consulting, by calling (888) 707-1177 or by visiting the company’s web site at www.conningresearch.com.

About Conning Research & Consulting

Conning Research & Consulting is a division of Conning, a provider of asset management and insurance industry research and consulting services to insurers.  Conning Research & Consulting has published independent insurance industry research for 50 years, including market coverage of 30 segments of the industry in addition to industry forecasting and identification and analysis of major strategic issues. As a result of its wealth of experience and intimate knowledge of the insurance industry, Conning understands industry challenges and opportunities and provides in-depth analyses on a wide range of industry products and issues. Conning is headquartered in Hartford, CT.