2015 Property-Casualty Loss Reserves: Reserves Weaken, but Some Redundancies Remain


Michael Warner
Conning, Inc.

Conning—Property-Casualty Loss Reserves Weaken, but Some Redundancy Remains

(Hartford, CT) May 18, 2016—The property casualty industry’s reserve releases and overall loss reserve position are diminishing, but reserves still show some redundancy, according to a new study by Conning, Inc.

“The property-casualty industry’s reserve adequacy remains stable in spite of additional reserve releases during 2015,” said Robert Farnam, Vice President, Insurance Research at Conning. “The industry released $7.0 billion in reserves in 2015 from years 2014 and prior, representing 1.2 percent of reserves and 1.4 percent of premium in 2015. The 2015 release marks the tenth consecutive year of reserve releases, but was well below the releases of recent years.”

The Conning study, “2015 Property-Casualty Loss Reserves: Reserves Weaken, but Some Redundancies Remain” reviews the property-casualty industry’s loss reserve position at the end of 2015, by line of business and in total.

“Our review of loss reserves for the property-casualty industry suggests that reserves remain modestly redundant, by about 1.7 percent of total carried reserves, even after additional reserve releases seen in 2015,” said Steve Webersen, Head of Insurance Research at Conning, Inc. “In the core casualty lines of business reviewed, the indicated redundancy is 2.1 percent of core casualty reserves, compared to a 4.4 percent redundancy estimated at year-end 2014. The stability in reserve adequacy may be ascribed to muted claims activity due to the recession and weak recovery, and to favorable pricing and premium growth in recent years. However, loss development patterns have deteriorated in the most recent years across most lines, and pricing strength has given way to softening.”

“2015 Property-Casualty Loss Reserves: Reserves Weaken, but Some Redundancies Remain” is available for purchase from Conning by calling (888) 707-1177 or by visiting the company’s web site at www.conningresearch.com.

About Conning®

Conning (www.conning.com) is a leading investment management company for the global insurance industry, with over $103 billion in assets under management as of March 31, 2016, through Conning, Inc., Goodwin Capital Advisors, Inc., Conning Investment Products, Inc., Conning Asset Management Limited, Conning Asia Pacific Limited, and Octagon Credit Investors, LLC are all direct or indirect subsidiaries of Conning Holdings Limited (collectively, “Conning”) which is one of the family of companies owned by Cathay Financial Holding Co., Ltd., a Taiwan-based company. The company's unique combination of asset management, risk and capital management solutions and insurance research helps clients achieve their financial goals through customized business and investment strategies. Founded in 1912, Conning provides clients with innovative solutions, leveraging its global capabilities, investment experience, proprietary research and risk management technology. Headquartered in Hartford, Connecticut, Conning also has offices in New York, London, Cologne, Hong Kong, and Tokyo.